Total sales of homes across the U.S. remained tepid in 2025 for the third year in a row, hitting their lowest level in 14 years, according to a new analysis from the Realtor.com® economic research team.
Combined sales of new and existing homes, which are usually reported separately, were at 4.741 million last year, down just slightly from 2024 and reaching the lowest level since 2011.
Total home sales improved marginally in the Northeast, Midwest, and South compared with 2024, but dropped nearly 3% in the West, a decline that was big enough to turn national growth negative.
Overall, total home sales have been remarkably low and little changed for three straight years, bouncing along the bottom ever since mortgage rates rose sharply in 2022.
“It goes to show how sensitive the market is to interest rates,” says Realtor.com senior economist Joel Berner. “The last three years have had total sales levels that are on par with the years following the global financial crisis [of 2007–09], but there has been no exogenous shock anywhere near that level during the post-COVID recovery.”
Instead, affordability challenges appear to be the main headwind for homebuyers, with prices marching to new record highs and elevated interest rates adding to monthly payments.
“Buyers are just seriously constrained by what they can afford in the housing market,” says Berner. “They should be in better position than they were in 2011. The job market is certainly stronger now, but the same numbers of them are choosing to buy homes.”
Indeed, total home sales for 2023–25 look remarkably similar to the period from 2008 to 2011, when home values were plunging and the market was in deep freeze.
This time around, there has been no similar price correction, leaving homebuyers who are priced out of the market waiting for either higher incomes or lower mortgage rates.
“The low sales figures recently also make me think that there is a considerable level of pent-up demand, and that if rates do fall meaningfully, there will be lots of buyers ready to jump on the opportunity,” says Berner.
Mortgage rates did ease for the first two months of this year, reaching a low of 5.98% in late February, crossing below the 6% threshold for the first time in more than three years.
It seemed like an auspicious start to the spring housing season, but the U.S.-Israeli war against Iran has introduced new complications.
Soaring oil prices as a result of the war have ignited fears of inflation, putting new upward pressure on mortgage rates.
Rates ticked back up to 6% last week and are expected to rise further as long as oil prices continue running hot.
It may prove to be a temporary blip on the way to lower rates and a recovery in the housing market. Or, a prolonged oil shock could be the X factor that keeps home sales historically low for a fourth straight year.
