Written by David Dodge  

The U.S. housing market faced another month of sluggish activity in June 2025, as homebuyers continued to grapple with affordability challenges and hesitated to commit to purchases. For the second consecutive month, pending home sales—a key indicator of future housing activity based on signed contracts—declined, painting a picture of a market struggling to find its footing. According to data from the National Association of Realtors (NAR), this slowdown reflects broader economic pressures, including high home prices and elevated interest rates, which are keeping many potential buyers on the sidelines.

In this blog, we’ll break down the latest trends, explore regional variations, and discuss what these numbers mean for buyers, sellers, and the broader economy. We’ll also highlight early signs of optimism and consider the long-term implications of these market dynamics.

National Trends: A Persistent Decline in Pending Home Sales

Pending home sales, which measure contracts signed for home purchases, fell by 0.8% from May to June 2025 and were down 2.8% compared to June 2024. This decline signals that fewer buyers are moving forward with purchases, even as more homes become available on the market. The drop is particularly concerning because pending sales are a forward-looking metric, suggesting that closed home sales in the coming months may also remain weak.

Several factors are contributing to this slowdown:

• High Home Prices: Despite some cooling in certain markets, home prices remain near record highs, making it difficult for first-time buyers to enter the market.
• Elevated Interest Rates: Mortgage rates, which have stayed stubbornly high, increase borrowing costs, reducing buyers’ purchasing power.
• Economic Uncertainty: Inflation and concerns about job security are causing some buyers to delay major financial decisions like purchasing a home.

Regional Breakdown: Where the Market Stands

The housing market’s performance varies significantly across the U.S., with some regions facing steeper declines than others. Here’s a detailed look at the data:

• West: The Western U.S. saw the most significant drop in activity, with pending home sales plummeting 3.9% month-over-month and 7.3% year-over-year. This region, home to some of the nation’s priciest markets like San Francisco and Seattle, is particularly sensitive to affordability challenges. High costs and limited inventory continue to push buyers out of the market.
• South: As the largest housing market by transaction volume, the South experienced a 0.7% monthly decline and a 2.9% annual drop. Cities like Atlanta and Dallas, which saw rapid price growth in recent years, are now cooling as buyers face higher mortgage payments.
• Midwest: Pending sales in the Midwest slipped by 0.8% from May and 0.9% compared to June 2024. This region, known for more affordable housing, is still feeling the pinch of rising interest rates, which are dampening demand.
• Northeast: The Northeast was the only region to buck the trend, posting a 2.1% monthly increase in pending sales. However, activity remained flat compared to the previous year. The Northeast’s resilience may be due to strong demand in markets like Boston and New York, where job growth and limited inventory continue to drive competition.

Expert Insights: Cautious Optimism Amid Challenges

Lawrence Yun, NAR’s chief economist, offered a nuanced perspective on the market’s current state. He noted that “buyers are proceeding with caution, even as more listings become available.” The Northeast’s modest gains stand out, particularly given that the region leads the nation in home price appreciation. This suggests that demand remains strong in certain pockets, even in the face of high costs.

Yun also highlighted early signs of improvement, citing the NAR’s Realtors Confidence Index, which showed a 4% year-over-year increase in buyer traffic and a 6% rise in seller activity. These upticks suggest that both buyers and sellers are starting to re-enter the market, potentially setting the stage for a recovery.

“Real estate professionals are sensing a shift in momentum,” Yun said, pointing to a recent increase in mortgage applications as a positive signal. “This could lead to stronger sales activity as we move into the late summer and early fall.”

What’s Holding the Market Back?

Despite these glimmers of hope, affordability remains a major obstacle. The combination of high home prices and elevated interest rates has made homeownership increasingly out of reach for many Americans, particularly first-time buyers. For example:

• A median-priced home in the U.S. now requires a significantly larger down payment and monthly mortgage payment than it did a few years ago.
• First-time buyers, who typically have lower incomes and less savings, are finding it harder to compete with investors and all-cash buyers.

Additionally, the uneven recovery across regions means that some areas—like the West—are facing more significant hurdles than others. This patchwork recovery could lead to divergent outcomes, with some markets rebounding faster while others lag behind.

Looking Ahead: A Gradual and Uneven Recovery

The June 2025 data suggests that the U.S. housing market is far from a full recovery. While there are signs of optimism, such as increased buyer and seller activity, the broader challenges of affordability and high interest rates are likely to persist in the near term. The regional variations in pending home sales further underscore that any rebound will be uneven, with some areas showing resilience while others continue to struggle.

For buyers, this market presents both challenges and opportunities. Those who can afford to enter the market may find less competition in certain regions, but they’ll need to navigate high costs and borrowing rates. Sellers, meanwhile, may benefit from increased buyer traffic but should be prepared for longer selling times in slower markets.

Impact Conclusion: Why This Matters

The sluggish housing market in June 2025 is more than just a real estate story—it’s a reflection of broader economic challenges that affect millions of Americans. A stagnant housing market can ripple through the economy, impacting everything from construction jobs to consumer spending. For individuals and families, the dream of homeownership feels increasingly out of reach, particularly for younger generations and first-time buyers. If affordability issues persist, they could exacerbate wealth inequality and limit economic mobility.

However, the early signs of optimism highlighted by industry experts offer a glimmer of hope. If mortgage applications continue to rise and more listings hit the market, we could see a gradual thawing of activity in the coming months. Policymakers, lenders, and real estate professionals will need to work together to address affordability barriers and create pathways for more Americans to achieve homeownership. The road to recovery may be long and uneven, but these efforts could pave the way for a stronger, more inclusive housing market in the future.

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