N※N

Housing's Deep Freeze: Existing Home Sales at 25-Year Lows (Dow Jones Indices:DJUSRE)

  //house-home.news-articles.net/content/2025/10/0 .. es-at-25-year-lows-dow-jones-indices-djusre.html
  Published in House and Home on Monday, October 6th 2025 at 11:22 GMT by Seeking Alpha
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

Housing’s Deep Freeze: Existing Home Sales Hit 25‑Year Lows

The U.S. housing market has slipped into an almost unprecedented slump. According to the latest data published on Seeking Alpha, existing‑home sales have fallen to their lowest level in a quarter‑century, a dramatic turn that could reshape the entire real‑estate ecosystem for months to come. The article, titled “Housing’s deep freeze: existing home sales hit 25‑year lows,” draws on a range of industry reports, economic indicators, and expert commentary to explain why the market is cooling so hard and what that means for buyers, sellers, and investors alike.

The Numbers Behind the Freeze

At the heart of the story is the stark decline in transactions. The National Association of Realtors (NAR) reports that existing‑home sales dropped by 18.9 % year‑over‑year in July 2023, settling at just 1.04 million homes sold—its lowest figure since 1997. In comparison, the previous year’s July average was 1.27 million units. Even more telling is the month‑over‑month trend: sales fell by 5.4 % from June to July, a drop that underscores a sustained slowdown rather than a one‑off shock.

Price growth has also flattened. The median existing‑home price in July was $440,000, up only 1.2 % from the same month a year earlier. By contrast, the median price in June had climbed 3.5 % year‑over‑year. The Housing Price Index (HPI) confirms the trend, showing a modest 0.8 % increase in July versus a 4.4 % rise in June.

Mortgage rates have been a key driver. The 30‑year fixed‑rate mortgage peaked above 7 % in late 2022 and has hovered in the 6.5‑7.0 % range since. Even modest rate hikes have amplified affordability pressures. The article notes that when the federal funds rate was raised to 5.25 % in March 2023, the median mortgage rate rose by 0.2 percentage points, pushing the average monthly payment for a $400,000 home from $2,240 to $2,460.

Supply Constraints Meet Demand Dryness

The article stresses that this downturn is not purely a function of rates. Inventory remains abnormally low. The NAR’s new‑home inventory levels—an aggregate measure of homes available for sale—are still below 3 months, a level rarely seen in the past decade. Coupled with a surge in “buy‑to‑rent” conversions (as investors shift from owner‑occupied to rental properties), the market is running out of options for first‑time buyers.

The affordability index, published by the Brookings Institution, fell to 58.7 in July, well below the 100 threshold that indicates average households can afford a median‑priced home with a 20 % down payment. The article points out that for every 10 points the index drops, roughly 5 % of the market falls out of the buying range. With affordability hovering near 60, a sizable slice of potential buyers has been effectively shut out.

Regional Hotspots and Divergence

While the national trend is clear, the article draws attention to geographic differences. New York, California, and Washington state saw the sharpest declines, with sales falling 22–25 % year‑over‑year. Conversely, states with lower rates and steadier price growth, such as Texas and Florida, lagged behind only 12–15 % drops. These regional variations underscore how local economic conditions—like employment rates, wage growth, and regional supply constraints—interact with national mortgage rate swings.

The article also links to a NAR report that details the “price‑to‑income” ratio in different metro areas. In the Greater San Francisco Bay Area, the ratio has climbed to 7.5, indicating that a median income family would need 7.5 years of wages to afford a median‑priced home. In stark contrast, Houston’s ratio sits at 3.8, still within a more manageable range.

Implications for Different Stakeholders

Buyers – The article warns that first‑time home buyers may need to be flexible: accept lower‑priced homes, extend their search to suburbs, or consider renting until rates ease. It also cautions that the “lock‑in” effect (where sellers lock in high prices before a downturn) could mean that the market may correct more sharply in the coming months.

Sellers – For homeowners, the article suggests that those who entered the market at the height of the boom will face steep price penalties if they try to sell now. The median price drop of 1.2 % in July is a clear signal that the market may be in “price inventory” mode, where sellers must lower expectations.

Investors – Real‑estate investment trusts (REITs) and mortgage‑backed securities are also feeling the pinch. The article cites a Bloomberg snapshot that the yields on REITs fell to 4.6 % from a high of 5.4 % earlier this year, reflecting lower property values and the higher cost of financing. Meanwhile, mortgage‑backed securities have seen spreads widen as default risk concerns rise.

Lenders – Mortgage lenders may tighten underwriting standards. The article links to a report from the Federal Reserve Bank of St. Louis that shows a modest uptick in loan delinquency rates during the summer, a trend that could prompt lenders to reduce risk‑based pricing.

Looking Ahead

The article concludes by offering a cautious outlook. While mortgage rates have begun to dip modestly—dropping to 6.9 % in late August—the overall environment remains uncertain. The Federal Reserve’s stance on interest rates, potential changes in the housing supply chain (such as construction delays), and geopolitical factors (e.g., global supply chain disruptions) could either accelerate or stall the current downturn.

Seeking Alpha’s commentary highlights that even if rates stabilize, the market may still remain in a “cooling” phase for several quarters. The article invites readers to keep an eye on the upcoming Consumer Price Index (CPI) releases, the next NAR monthly reports, and the Fed’s policy meetings for signals that might indicate a shift.

In sum, the U.S. housing market is experiencing a deep freeze that has pushed existing‑home sales to a 25‑year low, driven by high mortgage rates, low inventory, and deteriorating affordability. For anyone invested in real estate—whether as a buyer, seller, lender, or investor—the next few months will likely be a period of careful navigation and strategic adjustment.