75% of U.S. Metros See Home Price Increases as High Mortgage Rates Continue to Hinder Affordability

The U.S. housing market continues to grapple with significant affordability challenges, as 75% of metropolitan areas recorded home price increases in the second quarter of 2025. Despite these widespread gains, persistently high mortgage rates are notably hindering buyer activity, according to Lawrence Yun, Chief Economist for the National Association of Realtors (NAR). CNBC's Squawk Box recently highlighted Yun's analysis, stating, "> @nardotrealtor's @lawrence_yun explains why mortgage rates continue to hinder housing affordability."

Mortgage rates have remained elevated, hovering near 7%, with the average 30-year fixed rate at 6.94% as of late May. This has contributed to existing home sales remaining at a sluggish pace, with 2024 seeing the slowest annual sales since 1995. "The relatively subdued sales are largely due to persistently high mortgage rates," Yun explained, noting that sales have been at 75% of pre-pandemic activity despite significant job growth. Many current homeowners, locked into lower rates, are reluctant to sell, perpetuating a "lock-in effect" that limits market fluidity.

Despite the slowdown in sales volume, the national median single-family existing-home price reached a record high of $429,400 in the second quarter of 2025, marking a 1.7% year-over-year increase. While housing inventory has improved, with a 4.4-month supply at the end of April—a 20.8% increase from a year ago—this expanded supply has not translated into a significant surge in sales. "At this critical stage of the housing market, it is all about mortgage rates," Yun stated, emphasizing that lower rates are essential to reactivate the market.

The ongoing affordability crisis is particularly evident in the rising median age of first-time homebuyers, which has now reached 38 years old, delaying the crucial wealth-building process for many. Yun noted that pent-up housing demand continues to grow, with potential buyers awaiting more favorable conditions. Looking ahead, Yun forecasts existing home sales to increase by 6% in 2025 and 11% in 2026, with median home prices climbing 3% and 4% respectively. He projects mortgage rates to average 6.4% in the second half of 2025 and 6.1% in 2026, offering a glimmer of hope for future market activity.