Mid-2025 U.S. Real Estate Overview
As we enter the second half of 2025, the U.S. housing market stands at a critical crossroads. According to Cotality’s midyear housing market report, the landscape is marked by a unique blend of contradictions. Inventory is finally rising after years of scarcity, and mortgage delinquency rates are falling—both promising signs. Yet, affordability remains a major hurdle due to persistently high home prices, elevated property taxes, and steep borrowing costs.
This complex market is producing mixed signals for homebuyers, sellers, and investors alike. To navigate this uncertain terrain, we’ve broken down Cotality's top 10 insights into the most important housing market trends for 2025. Whether you're planning to buy, sell, or invest, these data-backed findings will help you make informed decisions.
1. Surge in Pending Sales vs. Drop in Closings
In May 2025, pending home sales jumped by 10% compared to the same time last year—a hopeful sign that buyer interest is returning. However, closed sales actually dropped by 14%, signaling that many deals are failing to go through. This discrepancy points to a market filled with financial roadblocks.
High mortgage interest rates, rising property taxes, and inflated home prices are making it difficult for buyers to complete transactions. Sellers, aware of these challenges, are also becoming hesitant: 6.2% of all listings were pulled from the market in April 2025, the highest delisting rate since 2011. Together, these trends highlight the volatility and cautiousness dominating the current housing environment.
2. Listing Prices Climb as Sales Prices Flatline
The national median listing price reached $495,000 in May 2025, a 5% increase from the previous year. However, the median sales price held steady at $450,000, resulting in a $45,000 gap between what sellers want and what buyers are willing (or able) to pay. That’s double the pricing gap observed in May 2024.
This growing disparity suggests a disconnect between market optimism from sellers and financial reality for buyers. It also reflects buyer fatigue in the face of limited affordability and inflated expectations. If this gap continues to widen, sellers may eventually need to adjust their price points—or risk prolonged periods on the market.
3. Rent Prices Surge in the Northeast and Midwest
With homeownership becoming increasingly unaffordable for many, the rental market is absorbing the pressure. In April 2025, single-family rents rose 2.9% year-over-year, marking the second consecutive month of growth. The steepest rent increases occurred in the Northeast, Midwest, and Mid-Atlantic regions—areas already experiencing tight housing supply.
This spike is largely a byproduct of rising for-sale home prices. Many would-be buyers are choosing—or being forced—to remain in the rental market, especially in regions where buying a home has become financially out of reach. As a result, landlords are facing higher demand and are raising rents accordingly, further compounding the affordability crisis.
4. Investors Drive Activity with All-Cash Power
Investors have continued to exert substantial influence on the housing market in 2025. So far this year, they’ve accounted for 30% of all single-family home purchases, with half of these investors being small-scale landlords owning fewer than 10 properties. This highlights a notable trend: it’s not just institutional buyers shaping the market—smaller investors are also thriving.
A key advantage for these buyers is their ability to pay all cash, shielding them from high mortgage interest rates. This makes them more agile in competitive markets and better equipped to close deals quickly. For traditional buyers reliant on financing, this trend represents a significant hurdle in securing properties, especially in high-demand neighborhoods.
5. Cash Sales Decline Slightly But Stay Strong
While cash purchases have dipped slightly, they still make up a significant share of home transactions. In the first five months of 2025, cash sales accounted for 36% of all home purchases, down just 2 percentage points from the previous year. This marks the lowest rate since 2021, but it remains historically high.
A closer look reveals that resales are more likely to involve cash (37%) compared to new home sales (14%). This distinction points to investor preference for older, often cheaper, properties where they can maximize rental yield or future resale value. Despite the modest decline, strong cash-buying activity continues to support housing demand and limit inventory recovery in key markets.
6. Mortgage Delinquency Rates Improving
Despite affordability issues plaguing many buyers, the overall health of the mortgage market has shown signs of recovery in 2025. Total mortgage delinquencies fell to 2.8% in April, down from a peak of 3.2% in December 2024. Serious delinquencies—loans that are 90 days or more past due—also declined to 0.9%, and foreclosure rates remained stable at 0.3%.
This improvement is primarily driven by a decline in early-stage delinquencies, suggesting that more homeowners are managing to stay current on their mortgage payments despite broader economic headwinds. It may also reflect stronger underwriting standards in recent years, which have reduced the risk of widespread defaults.
7. FHA and VA Loans Under Financial Pressure
While the overall delinquency trend is improving, the FHA and VA loan segments are under significant stress. As of mid-2025, 3.6% of FHA loans were seriously delinquent, compared to 2.3% of VA loans and just 0.65% of conventional loans. These figures indicate a growing divide in loan performance based on borrower profile.
FHA and VA loans are commonly used by first-time buyers, lower-income households, and veterans—groups more susceptible to financial instability during periods of economic strain. The elevated distress levels among these loans raise concerns about systemic inequality in housing access and long-term homeownership sustainability for vulnerable populations.
8. Geographic Hotspots of Mortgage Stress
Regional disparities in mortgage performance are becoming more pronounced in 2025. States in the South and East are experiencing the highest rates of serious mortgage delinquencies, with Louisiana (1.87%), Mississippi (1.57%), New York (1.5%), and Florida (1.43%) leading the way.
These higher rates are often tied to localized economic challenges, such as slow job recovery, natural disasters, or demographic shifts. By contrast, states in the West have remained relatively stable in terms of mortgage performance, suggesting more resilient housing markets or more favorable economic conditions in those regions.
9. Homeowners Sit on $11 Trillion in Untapped Equity
Even as affordability pressures mount, U.S. homeowners are sitting on a goldmine of wealth in the form of home equity. As of Q1 2025, the average loan-to-value (LTV) ratio is just 43%, leaving a vast $11 trillion in tappable home equity available. This translates to approximately $193,000 per homeowner who could potentially borrow against their property without exceeding the 80% LTV threshold.
However, with interest rates hovering between 6.5% and 7%, many are choosing not to pursue cash-out refinancing. For most, the cost of tapping into this equity is too high compared to the benefits. This hesitance could change if rates begin to fall later in the year, potentially unlocking a surge in home improvement loans or debt consolidation refinancing.
10. Equity Trends: Florida & Texas Lose Ground
Despite overall equity strength, certain states have seen noticeable declines in homeowner wealth. From Q1 2024 to Q1 2025, average home equity dropped by $4,000 nationally, but Florida and Texas experienced much steeper declines—$26,000 and $23,000 respectively. These drops are linked to localized housing corrections and shifting demand dynamics.
Still, the national outlook remains positive. The average U.S. homeowner now holds over $300,000 in equity, which is $120,000 more than at the start of the decade. This long-term growth in equity continues to support consumer confidence and offers financial flexibility to millions—especially in regions where price corrections have been modest or nonexistent.
Conclusion: What's Next for the 2025 Housing Market?
The mid-2025 housing market is a paradox. Inventory is on the rise, and mortgage performance is generally improving. Yet, the dream of homeownership remains out of reach for many Americans due to persistently high home prices, inflated mortgage rates, and deepening regional disparities.
Investors continue to dominate the market with all-cash deals, while regular buyers face financing hurdles and a widening gap between listing and sales prices. Homeowners, although sitting on record levels of equity, are largely unwilling to refinance under current rate conditions.
As we look to the second half of the year, interest rates may prove to be the single most important variable. If borrowing costs begin to ease, it could shift the entire landscape—bringing renewed activity to both the purchase and refinance markets. Until then, buyers and sellers must proceed with caution and clarity in an increasingly divided housing environment.
