US home sales remain sluggish amid elevated mortgage rates

The doldrums persist for the US housing market. Affordability has plunged to its worst level in decades (especially for first-time buyers, as we have highlighted previously).

Existing home sales figures published by the National Association of Realtors (NAR) remain deeply subdued — stuck well below pre-pandemic levels. The pending home sales index, which typically leads resale activity by one to two months, has also stagnated; that suggests continued weakness ahead.

Despite several Federal Reserve rate cuts since 2024, the 30-year mortgage rate stubbornly remains elevated at around 7%. This not only suppresses buyer demand but effectively traps many sellers in their homes through the “lock-in effect.” Homeowners who secured ultra-low rates in 2020-2021 are reluctant to sell or refinance because doing so would mean giving up those favorable rates in exchange for much higher payments today.

Expensive mortgages and pricey housing combine to confront prospective buyers with a double challenge. Surging ownership costs could push many Americans out of the market altogether.

Our final chart compares the monthly principal and interest payment required to purchase a median-priced US home with the median US asking rent. Owning a home now costs significantly more than renting — the widest gap on record. Since 2020, monthly ownership costs have nearly doubled.

Explore more visuals here: United States Real Estate