America's Housing Market Closes Its Worst Four-Year Stretch Since the 1990s

The numbers don't lie, and the story they tell is sobering. Sales of previously occupied U.S. homes totaled just 4.06 million in 2025, according to data released by the National Association of Realtors. That figure is essentially flat compared to 2024—when sales had already sunk to their lowest level since 1995—marking the fourth consecutive year of depressed housing activity.

A Historic Drought in Home Sales

To put this in perspective: during the pre-pandemic years of 2017-2019, annual home sales averaged roughly 5.3 million units. The current level represents a decline of nearly 25% from that baseline, a shortfall of more than 1.2 million transactions annually that has rippled through everything from furniture retailers to moving companies to home improvement stores.

"We haven't seen four consecutive years of sales this weak since the early 1990s," said Lawrence Yun, chief economist at the National Association of Realtors. "The combination of elevated mortgage rates and limited inventory has created a uniquely challenging environment for buyers."

The Affordability Crisis in Numbers

The mathematics of homebuying have become increasingly punishing. The national median existing-home price reached $407,500 in 2025, while 30-year mortgage rates hovered near 6.15% at year-end—down from recent peaks but still roughly double the sub-3% rates that prevailed in 2021.

For a buyer putting 20% down on a median-priced home, the monthly payment (principal and interest alone) works out to approximately $1,980—before property taxes, insurance, and maintenance. At 2021's rates, that same payment would have been closer to $1,380, a difference of $600 per month or $7,200 annually.

"The lock-in effect continues to constrain supply. Homeowners who refinanced at 3% have little incentive to sell and take on a 6% mortgage, even if their life circumstances have changed."

— Chief economist at a national real estate brokerage

Regional Variations Tell a Complex Story

The national figures mask significant regional variation. Sun Belt markets that boomed during the pandemic migration have seen the sharpest corrections, with some metros in Florida, Texas, and Arizona experiencing double-digit price declines from their 2022 peaks. Meanwhile, supply-constrained coastal markets in California and the Northeast have proven more resilient, with prices holding steady despite transaction volume falling.

The inventory picture shows tentative improvement. Listings have risen from their pandemic-era lows, with active inventory up roughly 20% year-over-year in many markets. However, absolute levels remain well below historical norms, and the months-of-supply metric still indicates a seller's market in most regions.

The Builder Response

Homebuilders have attempted to fill the gap left by constrained existing-home inventory, but their efforts face headwinds of their own. Construction costs remain elevated, labor shortages persist in key trades, and many builders report that buyer traffic has been inconsistent despite strong underlying demand.

New home sales have held up better than existing home sales—a reversal of historical patterns—as builders offer rate buydowns, closing cost assistance, and other incentives that individual sellers cannot match. Still, new construction accounts for only about 15% of the overall market, limiting its ability to compensate for the existing-home drought.

2026 Outlook: Cautious Optimism

Looking ahead, industry forecasters see reasons for measured optimism. The National Association of Realtors projects home sales to increase by approximately 14% nationwide in 2026, which would bring volumes back to roughly 4.6 million—still below pre-pandemic norms but representing meaningful improvement.

The foundation for this optimism rests on several pillars: mortgage rates that have stabilized and could decline further if the Federal Reserve resumes rate cuts; inventory that is slowly normalizing; and income growth that has, at long last, begun to outpace home price appreciation in many markets.

"U.S. homebuyers will start to get some relief in 2026, with affordability improving as income growth outpaces home-price growth," noted Redfin's 2026 housing outlook. "This year will mark the beginning of a long, slow recovery for the housing market."

What This Means for Buyers and Sellers

For prospective buyers who have been waiting on the sidelines, the data suggests that perfect conditions may never arrive—but conditions are unlikely to deteriorate significantly from current levels. Those with stable employment and adequate savings may find that today's market, while challenging, offers more negotiating power than the frenzied bidding wars of 2021-2022.

For sellers, particularly those who purchased before 2020, substantial equity gains provide cushion even if prices soften further. The decision to sell increasingly depends on life circumstances rather than market timing, as the calculus of trading a low-rate mortgage for a higher-rate mortgage remains unfavorable.

The housing market's four-year slump has been painful for all participants. But as 2026 begins, the fundamental forces that drive housing demand—household formation, employment growth, and the basic human need for shelter—suggest that activity will eventually normalize. The question is not if, but when.