Sellers start holding back as market demand drags 

Potential home sellers might be starting to get the hint that market demand is lacking this spring as new listings slow more than is typical for this time of year.

New home listings were up 6.3% year-over-year for the past four weeks ending on June 1, according to Redfin's weekly report — one of the smallest upticks recorded in the past three months. While new listings typically peak in mid-May before dropping off at the end of the month, the report noted that the slowdown in late May was the biggest for that time period in a decade.

Meanwhile, Redfin data indicates new listings are declining year-over-year in 11 of the country's 50 most populous metro areas. The most significant drops are occurring in San Jose, California, and in four Florida cities: Orlando, Fort Lauderdale, Tampa and West Palm Beach. 

The explanation for why the market is stuck remains the same: Elevated mortgage rates, high home prices and economic uncertainty are keeping buyers away.

Rates dip slightly

The 30-year fixed-rate mortgage ticked down this week, averaging 6.85% as of June 5 compared to 6.89% one week earlier, according to Freddie Mac. The current rate remains in the neighborhood of last year's average of 6.99%, a time when the market was similarly sluggish.

At the National Association of Realtors' mid-year legislative meetings this week, NAR Chief Economist Lawrence Yun described mortgage rates as "the magic bullet" that could energize home sales. But there are other factors holding buyers back, according to Bright MLS Chief Economist Lisa Sturtevant, who noted that the monthly payment for a median priced home is nearly double what it was in 2019.

"Some analysts are saying that to get the sluggish housing market moving, all we need is for mortgage rates to fall," Sturtevant said. "But if home prices continue to rise, a drop in interest rates is not going to make much difference to a typical homebuyer. And a drop in rates certainly won't make much of a dent in affordability."

Mortgage applications tick down

Applications for mortgages have slowed in the last week, according to the Mortgage Bankers Association, with overall applications down 3.9% for the week ending on May 30 as the seasonally adjusted purchase index dropped 4%. But purchase applications are still running 18% ahead of this time last year, MBA Vice President and Deputy Chief Economist Joel Kan noted.

Meanwhile, the overall number of mortgages secured is a shadow of what it was a few years ago. A new report from ATTOM showed that 1.4 million mortgages were secured in the first quarter of 2025, down 14% from the fourth quarter of 2024. In comparison, 4.2 million mortgages were secured in one quarter in early 2021.

"The red-hot housing market we've seen over the last few years meant that most home loans were going toward new purchases, but that appears to be changing," ATTOM CEO Rob Barber said in a news release. "Rather than borrowing money to buy a new property, the data shows homeowners are increasingly looking to restructure their existing mortgages or borrow equity from their homes to cover other expenses."

Another market headwind: Tariff talks

Uncertainty about tariffs continues to impact the housing market. The Trump administration's latest move increasing tariffs on imported aluminum and steel from 25-50% is expected to raise the costs of key construction materials, further hurting affordability, according to Hannah Jones, a senior economic research analyst at Realtor.com.

"The ongoing trade war and general economic uncertainty continues to cast a shadow over both consumer and builder sentiment, with new construction activity slowing as builders brace for higher prices and weaker demand," Jones said.

Luxury home prices rise despite sluggish sales

That economic uncertainty appears to be spilling into the luxury home market, according to a Zillow report. In April, 12% fewer high-end homes went under contract compared to March, and there was also a 5% drop in new listings from March to April.

Even so, prices are still climbing in the luxury market, with home values up 2.7% year-over-year. The typical luxury home is worth about $1.8 million nationwide, Zillow's report said, with the range across the U.S. spanning from roughly $835,000 in Buffalo, New York, to nearly $6 million in San Jose.

Continued home price growth is "a promising sign" for potential luxury home sellers, according to Zillow Senior Economist Orphe Divounguy.

"The luxury market is often international, so global economic conditions and stability also play a significant role," Divounguy added. "As economic conditions begin to stabilize, the luxury housing market could regain some momentum."