House Prices Fall for 5th Straight Month as Mortgage Rates Stay High

March 17, 2025: U.S. home prices have declined for the fifth month, driven by sustained pressure from high mortgage rates and reduced buyer activity. The cooling trend reflects a broader shift in the housing market as borrowing costs continue to suppress affordability and slow transaction volumes.

According to the latest data from national property indexes, median home prices have declined month over month across multiple metropolitan regions. Year-on-year comparisons still show slight gains in some markets, but the momentum has clearly weakened. Cities that experienced rapid appreciation during the pandemic—such as Austin, Phoenix, and Las Vegas—are seeing the steepest corrections.

The average 30-year fixed mortgage rate remains above 7%, significantly impacting purchasing power. Higher rates have eroded buyer budgets, pushing many prospective homeowners to the sidelines. Sellers, meanwhile, are reluctant to reduce prices further, creating a standoff that continues to constrain market activity.

Inventory levels have increased modestly but remain below pre-pandemic norms. New listings are limited, as current homeowners hold on to low-rate mortgages secured in prior years. As a result, housing turnover remains sluggish even as prices retreat.

The slowdown has affected both residential developers and institutional investors. Builders are offering more incentives to maintain sales, including interest rate buydowns and closing cost assistance. Investors are recalibrating portfolios, with some shifting capital to rental markets or commercial assets with more resilient cash flows.

Economists are divided on whether this represents a temporary correction or the early stages of a broader housing market contraction. If rates stay elevated into mid-year, additional price declines are likely. However, any indication of Federal Reserve easing could stabilize demand and moderate further depreciation.

Policymakers are watching the trend closely. Housing affordability remains a key economic pressure point, particularly in urban areas where wage growth is not keeping pace with ownership costs. Without relief on interest rates or structural housing supply reforms, the market may remain under pressure through the year’s second half.