The housing market spent its third straight year in a deep freeze, as high mortgage rates and prices sidelined buyers and discouraged sellers from listing.
4.06 million homes were sold in 2025, according to National Association of Realtors data, unchanged from last year, when home sales were at the lowest level since 1995.
“2025 was another tough year for people in the business,” said Lawrence Yun, the NAR’s chief economist. “But it was also a very difficult year for first-time buyers.”
Read more: How to buy a house: A guide for first-time home buyers in 2026
Historically, existing home sales have averaged closer to 5 million a year. But the market was thrown into disarray in mid-2022 when mortgage rates began rising rapidly, pricing out many buyers. Those who still braved the market found low inventory levels, high prices, and unhurried sellers.
Toward the end of 2025, mortgage rates of around 6.2% — roughly year-to-date lows — helped bring some buyers back into the market.
Home sales finished the year strong, rising 5.1% in December from a month earlier, to a seasonally adjusted annual rate of 4.35 million — the best result since February 2023. Compared with a year ago, sales were up 1.4%.
Sales increased in all parts of the country, led by the South, which saw a 6.9% jump from a month earlier. The West followed with a 6.6% increase.
There are signs that the recent uptick in sales may continue, especially if mortgage rates stay near 6%. Home contract signings, a step that occurs a month or two before a sale is recorded, were up 3.3% in November. And mortgage application activity jumped last week after rates fell in response to President Trump’s announcement that Fannie Mae and Freddie Mac would buy an additional $200 billion of mortgage bonds.
Applications to purchase a home were up 16% through Friday compared to a week earlier, according to the Mortgage Bankers Association. Average 30-year mortgage rates briefly dropped below 6% last week after the announcement.
“Lower mortgage rates always lead to more home sales,” Yun said. “It looks like in 2026, we will have an increase in home sales.”
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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