Real Estate Market Update: May 2025

Similar to last year, the spring housing market has yet to bloom.

Between the record-high home prices, elevated mortgage rates, and economic uncertainty, home buyers and sellers are reluctant to make a move. Luckily, experts predict a healthier housing market in the months ahead.

Want the latest real estate news? Here’s the housing market update for May 2025!

May Housing Market Trends

Nationally, we’re still in a mild seller’s market. However, considering we have the highest inventory levels in nearly five years, home buyers are in a better position to negotiate.

Existing Homes

Existing home sales slowed down by 0.5% in April and by 2% over the last year, according to the National Association of Realtors (NAR). The median existing-home price rose 1.8% to $414,000 from April 2024 to April 2025.

The drop in home sales isn’t surprising. 

NAR Chief Economist Lawrence Yun says home sales have been at 75% of normal or pre-pandemic activity for the past three years, even with seven million jobs added to the economy. Pent-up demand continues to grow, but only a meaningful decline in mortgage rates will help.

New Construction Homes

New home sales in April beat consensus expectations!

According to the National Association of Home Builders (NAHB), the median new home sale price in April was $407,200, compared to $415,300 a year ago. Sales of newly built, single-family homes also increased by 10.9% in April and were up by 3.3% compared to a year earlier.

Housing Inventory

Housing inventory continues to improve, especially the existing home supply.

Unsold inventory sits at a 4.4-month supply at the current sales pace, NAR reported. This is up from 4 months in March and 3.5 months in April 2024.

Meanwhile, new construction inventory has leveled off. The NAHB noted that while it’s 8.6% higher than a year ago, it’s only 1.6% higher than January. At the current build pace, the months’ supply for new homes is 8.1 compared to 7.7 last year.

Mortgage Rates

Mortgage rates are still stubbornly high.

As of May 29, 2025, the average mortgage rate for a 30-year fixed-rate mortgage is 6.89%, a slight increase from the previous week, according to Freddie Mac’s Primary Mortgage Market Survey. This is also higher than the 52-week average of 6.7%.

DC Housing Market Update

There’s good news in the DMV: The Northern Virginia and D.C. housing markets are outpacing the national market!

According to the Northern Virginia Association of Realtors (NVAR), the national housing market saw a slowdown in April, but Northern Virginia came out stronger with better home price appreciation, more inventory, and steady buyer activity.

In April, the median sold price increased 3.7% year-over-year to $779,000, outpacing the national increase of 1.8%. Closed sales decreased, but it was in line with national trends.

Inventory also increased to a 1.85-month supply—up 65.8% from April 2024—and active listings jumped 69% year-over-year

Many markets are experiencing a slowdown, but Northern Virginia is maintaining upward price momentum and growing inventory. These are both signs of a more balanced housing market.

Although prices continue to climb, more listings entering the market means buyers should have more room to negotiate!

It’s a Great Time to Get a Deal

Mortgage rates and home prices are still high, but that doesn’t mean you can’t get a good deal on a home.

Home builders and sellers are more likely to offer concessions, such as paying closing costs, mortgage rate buy-downs, discounts, price reductions, and more.

Spring has still been a volatile selling season for builders, especially amid President Trump’s import tariffs. However, as many as 61% of builders are using various kinds of sales incentives, NAHB reported. They don’t want to sit on houses long, and one strategy they use to move inventory is a price adjustment. Around 30% of builders lowered prices in each of the first four months of the year.

Barbara Corcoran also told Realtor.com® she thinks it’s a great time to buy.

According to Corcoan, when things are uncertain, buyers hesitate before committing to a new home. "That makes uncertain markets the best time to buy!” she said. When there’s hesitation, there’s less competition. It also means the seller is more likely to reconsider your offer or negotiate.

"When the market is uncertain, as it is now, I realize that’s a signal that I should be out there buying property, and that’s exactly what I do," Corcoran said.

Expert Housing Marketing Forecasts for 2025

It’s impossible to see what’s coming next in the real estate market, but leading experts have released their projections for the remainder of the year.

Here’s a quick breakdown:

• Mortgage rates: While you won’t see a drop, forecasters say there should be a modest decline in rates as the economic outlook stabilizes. Even a small decline can help reduce your monthly mortgage payments.

• Inventory: Inventory has improved a lot over the past year, and it will continue to grow! Sellers have tried to wait and see what happens with rates, but they’re getting tired of sitting on the sidelines. And if rates do come down, that should push even more sellers into the market.

• Home prices: Experts say home prices will continue to see growth, but the pace of growth should slow as inventory increases. Prices should rise about 2% this year on average.

A slight decline in mortgage rates, combined with growing inventory and healthier home price growth, should mean more buying power in the months ahead!

Final Thoughts

Even though we continue to battle high mortgage rates and rising home prices, there are still plenty of opportunities—especially in the Northern Virginia and DC housing markets!

Is now the right time to jump into the market? That depends on your goals, financial situation, and your local market. The good news is that builders and sellers are more willing to offer concessions, and experts predict better times ahead.

Looking to buy or sell in the DC area? Don’t navigate the complexities of the current housing market alone! Reach out today for expert real estate leadership.