Home Prices Continue to Climb Despite Weak Sales
The U.S. housing market remained frozen in 2025, with home sales stuck at a 30-year low as high prices and elevated mortgage rates continued to shut many buyers out.
Sales of previously occupied homes totaled 4.06 million last year, unchanged from 2024, which marked the weakest year for home sales since 1995, according to data released Wednesday by the National Association of Realtors. Annual sales have now declined every year since 2022, underscoring the depth and persistence of the housing slowdown.
Even as sales stalled, home prices continued to rise. The national median home price increased 1.7% in 2025 to $414,400. Sales have hovered around a 4-million annual pace since 2023, far below the historical norm of roughly 5.2 million homes sold each year.
“2025 was another tough year for homebuyers, marked by record-high home prices and historically low home sales,” said Lawrence Yun, the NAR’s chief economist. Yun noted, however, that conditions began to improve late in the year as mortgage rates eased and price growth slowed.
The housing slump traces back to 2022, when mortgage rates surged from pandemic-era lows. The average rate on a 30-year mortgage was near 7% at the start of 2025 and stayed elevated for much of the year. Rates began to ease in late summer, falling closer to 6% by the end of the year, according to Freddie Mac.
That decline helped lift existing home sales in December to a seasonally adjusted annual rate of 4.35 million units, a 5.1% increase from November and the fastest pace in nearly three years. The figure exceeded economists’ expectations of 4.14 million, according to FactSet.
Affordability Remains a Major Barrier
Home prices also rose in December, with the median sales price reaching $405,400, up 0.4% from December 2024. It was the highest price ever recorded for the month of December and marked the 30th straight month of year-over-year price gains.
Despite the late-year improvement in mortgage rates, affordability remains a major obstacle, particularly for first-time buyers who lack home equity and savings. With prices still near record highs and borrowing costs well above pre-pandemic levels, many prospective buyers remain on the sidelines heading into 2026.
