With all the doomsday soundbites about housing, it might be surprising to hear that home prices reached an all-time high today, according to the existing home sales report from the National Association of Realtors (NAR). On the bright side, inventory growth has increased in 2025, although this report showed a slight month-to-month decline.
This growth in inventory has helped slow down the increase in home prices to just 2% year over year. Let’s take a closer look at today’s existing home sales report.
Home-price growth Is cooling
In early 2021, I emphasized the need for higher mortgage rates to help cool down housing market prices. I also noted that we shouldn’t worry about a significant home-price crash or a severe recession, such as the one in 2008. Mortgage rates didn’t begin to rise until mid-2022, resulting in considerable damage to affordability. However, after three years of the lowest home sales on record, inventory has grown back to a reasonable level. Consequently, home-price growth has slowed down year over year.
If you look at the inventory data below, you’ll see that we are no longer at dangerously unhealthy levels. So while home prices hit an all-time high today, we are in a much healthier marketplace than we’ve been over the last few years.
Please note that median sales prices are highly seasonal, and we are now entering the traditional period of decline for the calendar year. We typically see the highest median sales price during the summer, which then gradually fades into the fall and winter.
June housing inventory
Total housing inventory in June was 1.53 million units
—Down 0.6% from May
—Up 15.9% from June 2024 (1.32 million).
Unsold inventory in June was 4.7 months supply
—Up from 4.6 months in May
—Up from 4 months in June 2024
As shown in the chart below, total active inventory has made significant progress since the lows during the COVID-19 pandemic, which made the housing market savagely unhealthy. Personally, I don’t consider housing inventory to be low nationally as long as active listings can remain above 1.53 million. Now, we are in the seasonal peak season for the NAR data and we’ll quickly see the seasonal decrease. However, simply returning to the 2019 levels during the seasonal peak inventory period is a victory for the U.S. housing market.
Total existing home sales for June
The total existing home sales in June decreased 2.7% month over month to a seasonally adjusted annual rate of 3.93 million. There was no change in sales year over year.
As we have discussed for many months, the existing home sales reports for June and October, which will be released from July to November, will have extremely low year-over-year comparisons to work with. If we see year-over-year growth in the data, it doesn’t say much at all. Today’s report was flat year over year, ending the months of year-over-year decline in the data; however, this is mostly due to last year being particularly bad for existing home sales.
Conclusion
The housing market tends to perform better when mortgage rates trend below 6.64% toward 6%, which hasn’t happened this year. That has led to some confusion with the growth reported in purchase application data today. I wrote this article to clarify the confusion surrounding the 25 straight weeks of year-over-year growth.
Regarding the existing home sales market, the most notable stories are the growth in inventory and the slowdown in price growth; if these trends weren’t happening this year, we would have more significant issues. As time moves forward, wages rise, households are formed, people get married and have kids. When mortgage rates fall toward 6%, the inventory growth and price growth cooling down is precisely what the doctor ordered to help with housing affordability.
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