More Homes, Fewer Buyers: But Will Lower Rates Bring More Buyers?

Welcome to the Subtitle!

If you’re in real estate, you’re in the right place. The Subtitle covers real estate’s latest stories in 5 minutes or less. If you know someone who would appreciate this content, please forward this email. Oh! And if someone forwarded this to you, don’t forget to subscribe to our free newsletter so you never miss out!

We’re listening. Send us feedback by replying to this email.

Let’s get into it.

News Flash

More Homes, Fewer Buyers: The Inventory Paradox Hitting Markets

The housing market is experiencing a curious disconnect. We're seeing the highest inventory levels since 2019, yet buyers aren't exactly rushing to the closing table.

Why? The old culprits remain: high mortgage rates and eye-watering prices continue to sideline potential buyers.

The numbers tell the story: Existing home sales crawled up just 0.8% in May to a seasonally adjusted annual rate of 4.03 million units.

While the national median home price hit a May record of $440,997, year-over-year growth slowed to a measly 0.7% — the weakest pace since June 2023. And some cities are actually seeing prices drop.

The market's getting sluggish in other ways too. Homes are spending more time waiting for buyers, and price cuts are becoming more common than they've been in previous years.

The real estate equation seems simple: more inventory should mean more sales. But when affordability remains out of reach, even the best selection won't move the needle.

But Rates Move Lower - Will That Bring More Buyers?

Could lower rates bring more buyers into the market? Mortgage rates just hit their lowest point since early May, with the average 30-year fixed loan dropping to 6.81% as of June 25.

This 10-basis-point decline didn't happen in a vacuum. The drop strongly correlates with the 10-year Treasury yield, which also reached its lowest level since May 7th.

What's particularly interesting? This decline occurred despite looming budget legislation that could push the U.S. debt ceiling north of $5 trillion — typically the kind of news that sends rates climbing.

Don't get too excited about a rate-cutting spree, though. Fed Chair Powell just doubled down on his "wait and see" stance regarding interest rate cuts.

The question now: Is this rate dip a blip or the beginning of a trend, and will it bring more buyers to the market?

Sources: [Source], [Source], [Source], [Source], [Source]

More You Should Know

• CRE Confidence Stabilizes: 2025 Outlook: Commercial real estate professionals report increased confidence for 2025, anticipating market stability and improved activity in the second half, despite ongoing bifurcation in the office sector and a surge of new multifamily housing supply. [Source]

• Zillow Forecasts Home Price Dip: Zillow now projects a 0.7% decline in national home prices from May 2025 to May 2026, marking the first annual decrease since 2012, primarily driven by a significant surge in housing inventory that empowers buyers. [Source]

• Builder Confidence Nears Low: Homebuilder confidence dropped in June 2025 to its second-lowest level since 2012, excluding pandemic months, as rising mortgage rates, tariff uncertainty, and economic concerns deterred buyers and forced builders to offer more incentives. [Source]

• Rents Decline, Vacancies Soar: The U.S. rental market is cooling with a 0.5% year-over-year decline in national median rent to $1,398 as of May 2025, while the national vacancy index hit a record 7% due to robust new apartment supply. [Source]

• Younger Buyers Face Hurdles: The median age for first-time homebuyers has reached a record 38 years old, pushing their market share down to 30% of sales due to diminishing affordability and access. [Source]

• AI Renovations Transform Home Sales: Chapter and Compass have formed a pioneering alliance to embed AI-powered renovation planning directly into real estate transactions, providing buyers and sellers with complimentary consultations, estimates, and discounts on renovation work. [Source]

• June Home Sales Beat Forecasts: Despite record-high median home prices, U.S. existing home sales in June 2025 surpassed economist expectations, reaching 4.03 million units and signaling a resilient housing market. [Source]

If you appreciate our content, please forward to a friend or coworker and encourage them to subscribe!