As of August 21, 2025, Realtors across the United States are witnessing a clear cooling in the housing market. For the first time in several years, conditions are beginning to favor buyers, as sellers confront slower sales, growing inventory, and an increasing need to adjust expectations. The shift comes after a long period of seller dominance fueled by limited supply, rising demand, and high competition. Now, that landscape is undergoing a significant transition.
Data released by the National Association of Realtors (NAR) illustrates how this shift is taking shape. The median price for existing homes nationwide rose just 0.2% year over year in July, bringing the figure to $422,400. While technically an increase, the growth is the weakest since mid-2023, signaling that momentum is no longer with sellers. In fact, about half of the U.S. is already experiencing outright price declines. The most notable drops are concentrated in the Western region, where the median home price fell by 1.4% to $620,700. The South also recorded a 0.6% dip, further highlighting how some of the nation’s largest markets are softening.
At the same time, sales activity is showing only modest improvement. Existing-home sales climbed 2.0% from June, reaching an annualized rate of 4.01 million in July. While this uptick exceeded analysts’ expectations, the numbers still reflect a sluggish pace when compared to the robust sales activity seen in the immediate aftermath of the pandemic housing boom. Elevated mortgage rates, combined with still-high home prices, continue to act as brakes on faster growth.
Perhaps the most significant factor reshaping the market is inventory. Housing supply jumped 15.7% compared to the same period last year, climbing to 1.55 million units. That translates to about a 4.6-month supply, the highest level seen since May 2020. For buyers, more homes on the market mean more choices, less urgency, and a stronger position in negotiations. For sellers, however, the expanding supply is forcing a reevaluation of pricing strategies.
Evidence of that pressure is already visible in the growing number of price cuts. In July, 27.4% of all listings saw price reductions—an unprecedented level since tracking began in 2018. For years, sellers were able to count on multiple offers and above-asking bids, often within days of listing. Now, homes are taking longer to sell, and sellers are increasingly compelled to offer concessions, whether in the form of price adjustments, covering closing costs, or providing other incentives to entice buyers.
Mortgage rates, though still historically elevated, have edged downward. The average 30-year fixed mortgage rate slipped to 6.58%, its lowest point since late 2024. While affordability remains a concern for many, the easing of rates offers some relief and could motivate more buyers to enter the market. Economists note that wage growth has recently begun to outpace home price increases, which could further improve affordability in the months ahead.
Lawrence Yun, chief economist at the NAR, emphasized that the combination of rising inventory and slowing price growth marks a notable turning point. According to Yun, conditions that had long favored sellers are shifting, and a new balance is beginning to emerge. “We are seeing greater flexibility in negotiations and more opportunities for buyers,” he said, noting that affordability is beginning to improve relative to recent years.
Regional variation remains an important part of the story. The West, with its historically high home prices, is showing the sharpest declines, suggesting that some overheated markets are undergoing a needed correction. The South, which saw rapid growth in recent years due to population shifts and job expansion, is also experiencing cooling. By contrast, markets in the Northeast and Midwest have proven more resilient, with prices holding steady or showing smaller fluctuations. These differences reflect how local economic conditions, supply chains, and migration patterns continue to shape the housing market in distinct ways across the country.
For Realtors and their clients, the implications are significant. Sellers are being encouraged to adopt more realistic pricing strategies, ensure homes are staged effectively, and consider incentives to stand out in a competitive environment. Buyers, meanwhile, have gained a stronger hand. Rather than competing in bidding wars, they are often able to take more time, negotiate more aggressively, and walk away if a deal does not align with their budget. The shift represents a dramatic change from the frenzied market dynamics of the last several years.
The broader economic backdrop is also playing a role. With inflation moderating and the Federal Reserve adopting a steadier approach to interest rates, the housing market appears to be settling into a new phase. Analysts believe the coming months will further test whether the slowdown is temporary or signals a longer-term rebalancing between buyers and sellers.
In the meantime, August 21, 2025, marks a clear point of transition. Realtors are navigating a market where buyers have more flexibility, sellers must recalibrate expectations, and both sides are adjusting to a housing landscape that looks increasingly different from the rapid-fire competition of recent years. For many Americans, this shift may open long-awaited opportunities to secure a home at more favorable terms, while challenging sellers to adapt to a market where negotiation—not urgency—defines the path to closing.
