With a Frozen Market and Rising Prices, the Housing Disconnect Grows

The U.S. housing market just wrapped up its most disappointing spring season in years. Existing-home sales fell 2.7 percent in June to a nine-month low, even as the national median home price climbed to a record $435,300.

Spring is typically the busiest time of year for homebuyers. Instead, 2025’s peak season fizzled. Inventory is climbing, time-on-market is extending, and nearly 15 percent of deals fell apart last month, the highest June cancellation rate on record.

The problem is affordability. Mortgage rates remain stuck above 6.5 percent, and even with some signs of seller flexibility, price growth and payment pressures continue to box out would-be buyers. Homebuilders are trying to pivot, but new permits remain sluggish.

With the Fed likely to remain on hold through the summer and rate relief not imminent, analysts now believe a broader housing recovery may be delayed until 2026.

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A Tale of Two Signals

The data paints a complicated picture. On one hand, housing starts climbed in June, and mortgage applications rose 22 percent year-over-year. On the other hand, rising cancellations, buyer hesitation, and long-standing affordability issues are hindering sales.

Some key dynamics are at play:

• Prices keep rising due to multi-year supply shortages and pent-up demand

• Inventory is climbing in key markets like Texas, Florida, and the Mid-Atlantic

• Time to sell is increasing, with listings sitting longer and seeing more price cuts

• Assumable mortgages are gaining attention, as buyers look for creative ways to lock in lower rates

While national supply remains below pre-pandemic norms, more sellers are returning to the market, not because they want to, but because life events are compelling them to do so. This shift could eventually help rebalance the market, but not without further downward pressure on prices.

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For investors, the housing slowdown may not be a crisis, but it’s a clear signal. Companies tied to existing home transactions, mortgage origination, and discretionary housing upgrades are likely to face pressure.

However, the picture isn’t uniformly negative. Builders focused on entry-level housing, retailers serving budget-conscious homebuyers, and financial firms specializing in loan innovation or servicing may find opportunities to succeed in this environment.

How to think about it:

• Avoid sectors tied directly to transaction volume, such as brokers, mortgage-heavy banks, or title insurers

• Watch for builder discounts and incentives that may pull demand forward in Q4

• Lean into firms with pricing power and non-discretionary housing exposure, such as repair, maintenance, and affordability plays

• Monitor regional divergence closely, as some markets are softening, while others remain tight

The Fed may not step in to save the housing cycle, but investors can still position for stability and opportunity as the adjustment plays out.

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 Top Takeaways

Housing’s high prices and low volume tell a story of friction, not collapse.

✅ More inventory and longer time on market are giving buyers leverage for the first time in years
✅ Mortgage demand is starting to tick up, but affordability remains the key constraint
❌ Sales activity may stay weak into 2026 unless rate cuts materialize faster than expected
❌ Sellers are slowly adjusting, but price expectations remain disconnected from demand

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