High Mortgage Rates Weigh on Homebuyers in Mid-2025
New U.S. home sales ticked up marginally in June 2025, underscoring continued fragility in the housing market as high mortgage rates, affordability constraints, and macroeconomic uncertainty keep many would-be buyers on the sidelines.
Sales of newly built single-family homes rose just 0.6% last month to a seasonally adjusted annual rate of 627,000 units, according to data released Wednesday by the U.S. Census Bureau and the Department of Housing and Urban Development. The reading marks one of the slowest sales paces since October 2024 and reflects a broader cooling trend in residential real estate, as 30-year mortgage rates hovered above 6.8% throughout the month.
“New home sales remained effectively flat in June, highlighting persistent softness despite what should be a seasonally strong period,” said Buddy Hughes, chairman of the National Association of Home Builders (NAHB). “Elevated borrowing costs and still-high prices are compressing affordability–especially for first-time and middle-income buyers.”
Industry analysts say that while homebuilders have ramped up incentives and made targeted price adjustments, these efforts have done little to reinvigorate demand.
“Even with price cuts and financing incentives, sales activity is subdued,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “Without a meaningful drop in rates or a boost in household income, we don’t expect a notable rebound in the near term.”
The June sales figure is an annualized estimate, reflecting the number of new homes that would sell over a 12-month period at the current monthly pace. A new home sale is recorded when a contract is signed or a deposit is made, regardless of the stage of construction.
Meanwhile, inventory levels continue to climb. As of the end of June, there were 511,000 new single-family homes for sale–a 1.2% increase from the previous month and 8.5% higher than a year earlier. The supply of unsold homes stood at 9.8 months, up from 8.4 months in June 2024, signaling persistent imbalances between supply and demand.
Move-in ready inventory–homes that are fully built and available for immediate occupancy–also rose sharply, totaling 114,000 units, a 21.3% year-over-year increase.
Builders have begun trimming prices in response. The median sales price for a new home slipped to $401,800 in June, a 4.9% decline from the prior month and down 2.9% from a year earlier.
Regionally, new home sales have fallen across the board in 2025. Year-to-date figures show declines of 25.6% in the Northeast, 8.5% in the Midwest, 1.6% in the South, and 4% in the West–further evidence of a housing market grappling with broad-based affordability and financing pressures.
With little relief in sight from the Federal Reserve or the bond market, industry insiders expect the housing sector to remain constrained in the second half of the year.
