Home sales are headed for their worst year since 1995

The U.S. housing market has recently shown small signs of relief as mortgage rates have edged down and home price growth has started to level off. Still, both buyers and sellers remain hesitant.

Homeowners are not listing their properties as much as before: active listings dropped 1.4% in August, the sharpest monthly decline since 2023, according to a report released Monday by Redfin.

“High housing costs and economic jitters have rattled buyers, and that unease has spilled over to sellers,” wrote Chen Zhao, Redfin’s head of economics research. Zhao added, “We currently expect existing-home sales to end the year at around 4.05 million, or roughly flat compared to 2024, which was the worst year for sales since 1995.”

The market remains stuck in a cycle of standoff. Mortgage rates and prices remain elevated — Redfin reports the median U.S. home price is up 1.7% year over year to $440,004 — making buyers reluctant to purchase. At the same time, many homeowners don’t want to give up their lower-rate mortgages or fear that they won’t get the price they believe their home is worth.

This stalemate is causing more sellers to either cut asking prices or remove listings altogether. According to Realtor.com, delistings rose 47% nationally in June compared to a year earlier, and are up 34% so far this year.

Realtor.com Senior Economist Jake Krimmel explained the shift: “What we’re seeing nationally is a market that’s gradually rebalancing, with buyers gaining leverage and sellers facing a tradeoff: Adjust to the market and sell for less, or hold out and risk sitting indefinitely. Many sellers still aren’t pricing to sell.”

Redfin says home sellers are retreating because buyer demand remains soft. Sales are still well below pre-pandemic levels, and the recent mild drop in mortgage rates hasn’t yet altered that trend. Zhao noted that could shift if rates fall further: “But that may change if rates continue declining; if we get a stronger-than-expected fall housing market, existing-home sales could end this year a little higher than last year.”