Home Price Growth Slows as Buyers Back Off Amid High Costs and Economic Uncertainty

Introduction

The U.S. housing market is showing signs of fatigue as price growth loses momentum and homebuyers step back amidst record-high costs and economic headwinds. According to a recent Redfin report, the national median home-sale price increased by just 2.6% year-over-year in mid-April 2025—half the pace seen at the end of 2024. This shift reflects rising supply and weakening demand, fueled by stubborn mortgage rates, costly monthly payments and broader financial unease.

A Nationwide Slowdown in Price Growth

Throughout the four weeks ending April 13, 2025, the national median sale price stood at $387,000, a 2.6% gain from the previous year. While this remains a healthy increase in absolute terms, it marks a significant deceleration from the 5–6% growth recorded at the close of 2024 and the dawn of 2025. Across major metropolitan areas, 10 of the 50 most populous regions actually saw prices decline year-over-year, with many records set in Texas and Florida. Jacksonville led losses at –2.8%, followed by San Antonio at –1.8%.

Drivers Behind the Cooling Market

Record-High Housing Costs

One of the primary barriers to a robust spring homebuying season has been soaring carrying costs. The median U.S. monthly mortgage payment—based on a 6.62% rate—hit a record $2,819 in mid-April. This figure factors in both principal and interest, excluding taxes and insurance. For many prospective buyers, such a monthly obligation represents a stretch, prompting some to postpone their search or lower their price expectations.

Economic Instability

Beyond financing costs, widespread economic uncertainty remains a constant drag on buyer confidence. Recent volatility in the stock market, concerns over potential recessionary pressures and trade-policy shifts have dampened consumer sentiment. As Redfin Premier agent Venus Martinez in Los Angeles observes, many first-time buyers are “nervous about a potential recession,” preferring to wait for more stable conditions before committing to a purchase.

Supply Rises While Demand Cools

In a shift from the tight inventory conditions that prevailed in recent years, new listings jumped 11.2% year-over-year, while the total count of active listings rose 12.3%. Some homeowners are putting their properties on the market now to avoid potential downturns that could drive values lower, while a calendar effect—due to Easter falling later in 2025 compared to 2024—also boosted listing numbers.

On the demand side, pending home sales were down 0.8% and mortgage-purchase applications declined 5% week-over-week in early April. Redfin agents across the country report that many house hunters are stepping back, hoping for lower rates or price corrections before making their move.

Leading Market Indicators

Several forward-looking metrics paint a picture of a market in transition:

• 30-Year Fixed Mortgage Rate: 6.86% daily average on April 16 (near a two-month high), down from 7.3% a year earlier.
• Weekly Average Rate: 6.62% for the week ending April 10—the lowest since mid-December, down from 6.88% year-over-year.
• Mortgage-Purchase Applications: Down 5% from the previous week, yet up 13% year-over-year.
• Home Touring Activity: Up 39% from the start of the year (compared to 33% one year earlier).
• Google Searches for “Home for Sale”: Up 10% from a month earlier (4% year-over-year).

Despite the cooling purchase demand, stronger touring and search activity suggests that many buyers remain interested—though more hesitant to pull the trigger.

Regional Variations

Not all markets are moving in unison. On the upside, Newark, NJ (10.9%), Cleveland (10.6%), New Brunswick, NJ (9.2%) and Milwaukee (9.0%) led price gains. Philadelphia also posted a solid 8.3% increase. Conversely, declines were concentrated in southern and western metros such as Jacksonville, San Antonio, Oakland and Austin. Florida markets—including Miami, Fort Lauderdale and West Palm Beach—experienced sharp drops in pending sales, exceeding 10% in some cases.

New listings surged in Washington, D.C. (28.8%), Boston (27.6%), Montgomery County, PA (26.8%), San Diego (26.6%) and Pittsburgh (23.7%). Houston and San Antonio bucked the trend with fewer new offerings year-over-year.

What This Means for Buyers and Sellers

For sellers, the market shift toward balance means fewer bidding wars and growing willingness to negotiate. Properties are taking longer to sell—the median days on market climbed to 41, up five days from last year—and only 25.8% now sell above list price, down from 29%.

Buyers, particularly those driven by necessity, are finding opportunities to negotiate price and terms even in historically competitive markets. However, many remain on the sidelines, watching for potential rate relief or further price corrections before reentering the market.

Conclusion

The U.S. housing market is entering a new phase. After more than a year of rapid price appreciation and fierce competition, growth is moderating as record-high housing costs and economic uncertainty cool buyer enthusiasm. At the same time, rising supply is offering relief to a market once starved for options. As we head into the summer selling season, both buyers and sellers will need to adjust expectations to this evolving landscape. While the market may no longer favor sellers as strongly as it did in 2024, informed participants can still find value and opportunity by staying attuned to changing conditions.