By Ronda Kaysen | The New York Times

As 2025 began, the stars were aligning for a housing market rebound.

Inflation was easing, the economy looked strong, and mortgage rates were drifting downward. By April, there were more available homes to buy than at any time since January 2020, according to the Federal Reserve of St. Louis. The conditions were ripe for buyers to reemerge, checkbooks in hands, and sellers to negotiate.

Then April 2, President Donald Trump rolled out his expansive global trade tariffs, shocking the stock and bond markets and sparking fears of a recession. Mortgage rates jumped again, hitting 6.89% for a 30-year fixed-rate loan May 29, their highest level since early February. The extreme volatility threw cold water on a fragile market. Buyers bailed out.

“There isn’t any urgency to buying right now — if anything it feels more risky to put a down payment into a home when you might not have a job six months from now,” said Daryl Fairweather, chief economist of Redfin.

Real estate agents across the country report a chilled environment, with sellers unwilling to lower their prices and buyers reluctant to make a big purchase as the economy flounders and the costs for a mortgage, insurance and property taxes rise. Even in markets where prices have fallen and inventory is piling up, like Austin, Texas, homes are sitting on the market for months. In fiercely competitive areas, like the New York City suburbs, where prices are still rising and homes sell fast, properties that would have gotten a dozen offers a year ago now get two or three.

“Yes, there is more inventory, but it’s almost like too little too late,” said Selma Hepp, chief economist for Cotality, a real estate data provider.

In 2024, there were fewer home sales than in any year since 1995. This year is looking worse. In April, the number of sales of existing homes dropped 2% from April 2024, while the median sale price rose 1.8%, marking 22 straight months of year-over-year price growth, according to the National Association of Realtors. The trade group also reported that pending sales are down from a year ago in every region of the country except the Midwest.

The number of canceled sales (one sign of a skittish market) also rose year over year, according to Redfin, which also found that there were nearly 500,000 more people trying to sell homes in April than there were people trying the buy them — the biggest such gap since Redfin began tracking the data in 2013.

La’Keshia White, a real estate agent in Douglasville, Georgia, said that some of her prospective buyers dropped out of the market after losing federal jobs. Others are nervous and scaling back their budgets to leave more cushion should their financial situation change.

“They used to be content, thinking their jobs are going to be there, but it’s not the same anymore,” White said.

In Lewisburg, West Virginia, Leah and Jesse Jones, who were in the market for a three-bedroom home, lost out on two bids: one to a cash buyer who waived contingencies and the other because the seller wouldn’t lower the price enough. After six months, they’ve paused their search, hoping a downturn might bring home prices down, too.

“I feel like buying a home, owning a home, is becoming a privilege that only the truly wealthy can enjoy,” said Leah Jones, 45, a clinical dietitian.

Yet despite a market full of reluctant buyers, sellers are not under pressure to drop their prices. Almost 60% of households have an interest rate below 4%, according to a study published in the Journal of Finance; selling would mean trading that low rate for a much higher one on a new purchase. Not since the 1980s, when borrowing rates soared into the double digits, have so many Americans been locked into their mortgages, said Lu Liu, an assistant professor of finance at the Wharton School at the University of Pennsylvania and an author of the study, describing the conditions as “unprecedented.”

Added to that, the country hasn’t built enough homes since the foreclosure crisis, creating a chronic lack of new housing supply that drags down the market and keeps prices high. “There is no panacea in sight,” Liu said.

Even Austin is stuck, despite starting construction on 102,000 single-family homes between 2020 and 2024, according to Zonda, a data provider. The median sale price there has fallen by 18% since the peak in April 2022, according to Unlock MLS, the multiple listing service for the Austin Board of Realtors.

But buyers still see an overheated market — the median home price jumped 69% from April 2020 to April 2022 — and an uncertain future. Many sellers, in turn, would rather pull a listing from the market than meaningfully lower the price. “It’s a bit of a frozen market,” said Eric Bramlett, an Austin real estate agent.