The U.S. housing market is flashing red. Builders are slashing prices. Buyers are backing off. And the mortgage rate pressure shows no sign of lifting. The result: a nationwide market slowdown that’s starting to resemble a structural crisis.
Homebuyers gain leverage—but prices still sting
After years of sellers holding the power, the tide is turning. Real estate agents across the country say demand is down—even in once-booming areas like Los Angeles and South Florida.
- In June, over 25% of Zillow sellers cut their asking price, the most for that month since at least 2018.
- Builders are offering incentives at record levels—66% in August 2025, per the National Association of Home Builders (NAHB).
- 85% of Florida counties saw annual price drops, ICE reports.
“Buyers are the most cautious they’ve been since the beginning of Covid,” said Brock Harris, a Los Angeles realtor.
Mortgage rates keep housing locked
Rates remain painfully high—averaging 6.58% for a 30-year fixed loan, according to Freddie Mac, the lowest in 10 months but still far from affordable. The Federal Reserve has hinted at cuts this fall, but those hopes are dimming.
While buyers are waiting for relief, so are builders—and it’s impacting confidence:
- Builder confidence fell to 32 in August, per NAHB, well below the neutral 50 mark.
- The index measuring buyer traffic is just 22, indicating very low interest.
“Affordability continues to be the top challenge,” said NAHB Chairman Buddy Hughes. “Buyers are waiting for mortgage rates to drop before moving forward.”
Signs of a slow-motion collapse
- Home sales are plummeting in Florida, Texas, Arizona, and parts of California.
- Some agents report sellers delisting homes altogether after failing to get their asking prices.
- Builders are relying on 5% price cuts month after month just to move inventory.
- Even new construction is struggling, with reduced incentives not closing the gap.
In Florida alone, one agent called it a full-fledged buyer’s market with “heavy inventory” and no urgency to act.
The ripple effect: economic uncertainty
This downturn isn’t just about rates or prices—it’s about fear.
- Economic instability is forcing buyers to hesitate.
- A recent weak jobs report raised concerns about future layoffs.
- Renters are staying put longer as rent growth has slowed—though July saw a slight 1.7% year-over-year rise, the highest since early 2023.
“There’s hesitancy to make a big financial commitment when there’s so much uncertainty,” said Redfin’s Chief Economist, Daryl Fairweather.
What happens next?
Experts say the Fed’s next move could swing sentiment, but mortgage rates don’t always follow. Last year, rates rose even after the Fed cut.
For now, buyers who act may have more room to negotiate—but they still face high borrowing costs. And with no strong signs of a bottom yet, sellers will need to adjust expectations fast.