The U.S. housing market faced continued challenges in late August 2025, with homebuyers, sellers, and builders all encountering difficulties. According to Realtor.com® Senior Economist Joel Berner, prospective purchasers are confronting a monthly cost increase of over $1,200 compared to pre-pandemic levels, driven by persistently high home prices and mortgage rates. Wage growth has not kept pace, making homeownership increasingly unattainable for many.
Sellers are also struggling, facing the least favorable market conditions since 2016. Home prices have stagnated, and properties are staying on the market longer. While inventory has grown, especially in Southern and Western regions, pending home sales declined from June to July. In contrast, parts of the Northeast and Midwest still face tight supply relative to 2019 levels.
New home construction has slowed as builders confront rising material and labor costs alongside weakening demand. July new home sales dropped both month-over-month and year-over-year. The median price of a newly built home is now nearly $20,000 below that of existing homes, prompting builders to cut prices to move inventory. However, shrinking profit margins have led to reduced construction activity.
Mortgage rates held at a 10-month low of 6.56%, down two basis points, offering slight relief. Market attention is focused on the Federal Reserve, as speculation grows over potential rate cuts. Despite President Trump’s call to remove Fed Governor Lisa Cook—a move aimed at influencing monetary policy—the Fed has maintained its independence, stating decisions will be data-driven.
Recent inflation data showed the Personal Consumption Expenditure (PCE) index rising at a pace above the 2% target, reinforcing the Fed’s cautious stance. While short-term rates may decline, long-term rates have trended upward due to political uncertainty, potentially offsetting gains in mortgage affordability.
In Miami, cash transactions dominate the luxury market. Over half of homes priced above $1 million are purchased without financing, allowing sellers to wait for optimal offers. This trend highlights a bifurcated market, where high-end segments remain robust while broader affordability issues persist.
The overall housing landscape remains sluggish, with homes taking one week longer to sell than in the previous year. Inventory is rising, but at a slower pace. Realtor.com® continues to provide updated data and analysis through its research portal and social media channels.
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Video: August 29, 2025 Economic and Housing Market Update
August 29, 2025 n nOverview: n nThe Realtor.com® economics team weekly video update gives you the relevant economic and real estate information you need to know each week every Friday to navigate the housing market as a homebuyer, home seller, or industry professional. n nFor the week ending August 29, Realtor.com® Senior Economist Joel Berner dives into what’s made this summer especially tough for buyers, sellers, and builders. Homebuyers are grappling with a $1,200-a-month cost increase compared to pre-pandemic times, while sellers are facing the least favorable conditions since 2016, with more stagnant prices and homes sitting longer. Builders? They’re stuck between falling buyer demand and rising construction costs, leading to slower sales and reduced activity. We also explore how political drama at the Fed is creating volatility in long-term mortgage rates—just as short-term rates are expected to dip. We round out the week with a surprising stat: in Miami, cash is king, especially in the luxury market where more than half of $1M+ homes are bought without a mortgage. n nYou’ll find all the details including full reports and our housing data for download at realtor.com/research. You can also follow us on X (formerly twitter) for real time updates. And instagram @realtordotcomecon for graphics. n nReports and articles referenced: n nCruel Summer: Why the U.S. Housing Market is Stuckhttps://www.realtor.com/research/cruel-summer-2025/ n nMiami Luxury Reporthttps://www.realtor.com/research/miami-luxury-housing-market-spotlight/ n nWeekly Housing Market Trends – Week of August 23https://www.realtor.com/research/weekly-housing-trends-view-data-week-august-23-2025/ n nCommentary on Mortgage Rates – August 28, 2025https://www.realtor.com/research/freddie-mac-mortgage-rates-august-28-2025/ n nCommentary on New Home Sales – July 2025https://www.realtor.com/research/new-home-sales-july-2025/ n nCommentary on Pending Home Sales – July 2025https://www.realtor.com/research/pending-home-sales-july-2025/ n nCommentary on Market Reaction to Trump’s Firing of Fed Governor Lisa Cook August 2025 https://www.realtor.com/news/real-estate-news/lisa-cook-fed-firing-trump/ n nFed’s Preferred Inflation Measure Heats Up, But an Interest Rate Cut Next Month Remains Likely https://www.realtor.com/news/real-estate-news/pce-inflation-july-2025-fed-interest-rate-cut/ n nHousing data for download: n nhttps://www.realtor.com/research/data n nVIDEO TRANSCRIPT: n nI’m Joel Berner, Senior Economist at Realtor.com. It’s been a cruel summer in the housing market as August comes to a close, with buyers, sellers, and builders all unhappy in their own way. This week we’ll take a look at the challenges facing them in 2025, we’ll dig into the numbers that have come out this week that show just how much they’re all struggling, and we’ll talk about the future of mortgage rates and how the current drama at the Federal Reserve might play a part. n nProspective home buyers are experiencing a serious budget crunch. The monthly cost of a home purchase is over $1,200 more than it was before the pandemic as high home prices and mortgage rates have lingered on. Incomes have grown over this same period, but not at a rate fast enough to make homebuying a reality for many. n nHome sellers are frustrated as well. 2025 has been the least seller-friendly summer since Realtor.com began tracking data in 2016, with prices stagnant and time on market steadily increasing.This dynamic is far from uniform nationwide, as many Northeastern and Midwestern markets still have not seen inventory reach back up to pre-pandemic levels and many Southern and Western markets now have significantly more homes for sale than they did in 2019. Despite the inventory growth, pending home sales fell again from June to July. n nBuilders are facing a double whammy of increased costs of labor and materials and decreased buyer demand. New home sales fell in July on both a month-over-month and year-over-year basis, and the median sale price of a new home is now almost $20,000 lower than the median sale price of an existing home. Builders are motivated to move inventory and have cut prices aggressively to entice buyers, but these compressed profit margins are leading them to pull back on construction activity. n nWatching the market this week, we see prices holding steady and inventory continuing to grow, but at a more moderate pace. The market remains sluggish, with homes spending a week longer than they did last year. n nMortgage rates remained at a 10-month low this week, dropping two basis points to 6.56%, and further relief may be in store as all eyes turn to the Federal Reserve. President Trump called for the ousting of Fed Governor Lisa Cook in his latest attempt to assert control and lower short-term rates, but the instability created by the move actually has long-term rates trending up, which may undo progress on lowering mortgage rates. The Fed has been clear that it will not bend to the political winds, and instead will base its decisions on data like the Personal Consumption Expenditure index, which came out today and showed inflation continuing at a pace higher than the Fed’s goal of 2%. n nFinally, cash rules everything around Miami, as more than half of home purchases of over $1 million in the sunny South Florida metro are made without a mortgage. The luxury and ultra-luxury segments of the market are flush with cash-rich buyers, allowing sellers to wait longer for the right offer to come in. n nYou can find all the details, including full reports and our housing data for download, at realtor.com/research. You can also follow us on X (formerly twitter) for real time updates. And instagram for graphics. n nSubscribe to our mailing list to receive monthly updates and notifications on the latest data and research.