Housing Market Softens, With Rising Inventory And Stabilizing Demand

U.S. housing market dynamics are shifting this June, with growing inventory levels and stabilizing buyer interest beginning to alter long-standing conditions in the market.

New home sales dropped 13.7% in May to a seasonally adjusted pace of 623,000 units—marking the lowest level since October 2024. This sharp decline was most pronounced in the South and Midwest, according to Business Insider, reflecting increasing affordability challenges faced by buyers. Meanwhile, homebuilders are reporting approximately 507,000 newly constructed homes ready for sale—consistent with a supply buffer of nearly 10 months, as noted by the same source.

Despite cooling in the new-construction segment, signs of recovery are emerging in the existing-home market. The Pending Home Sales Index—measuring signed contracts on existing homes—increased 1.8% in May to 72.6, surpassing analyst expectations, as reported by Reuters. All four U.S. regions showed gains, driven primarily by strong job and wage growth, though high mortgage rates continue to impede broader affordability.

One key relief factor is a recent dip in borrowing costs. The 30‑year fixed-rate mortgage rate eased to roughly 6.77%, its lowest in seven weeks, supported by renewed hopes for a Federal Reserve rate cut this summer, according to Reuters in the same report.

The combination of these trends—ample new and resale inventory, alongside slightly lower mortgage costs—suggests a gradual shift toward a more balanced housing market after years of overheating. First-time buyers, in particular, may find renewed opportunities if downward pressure on rates continues.

Still, median home prices remain stubbornly high, keeping the market challenging for many. Analysts warn that true affordability hinges not just on rate declines but also on continued wage growth and manageable inflation.