The housing market is not just cooling. It is cracking. The latest data from May 2025 shows existing home sales running at an annualized pace of 4.03 million units. That is the weakest May since 2009. It is also the second-worst May on record. Sales have now declined year over year for four straight months. The market is not frozen. It is bleeding out in slow motion.
Defaults are rising. The delinquency rate on single-family mortgages climbed to 1.78% in Q1 2025. That is the highest level since 2011. It is not just housing. Student loan delinquencies are up. Auto loan defaults are climbing. Credit card balances are at all-time highs. The Federal Reserve Bank of New York reported total household debt hit 18.2 trillion dollars in Q1, up 167 billion dollars in just three months. The consumer is not stretched. The consumer is tapped.
Prices are still rising. That is the part that makes no sense on the surface. The median existing home price in May was 422,800 dollars. That is up 1.3% from last year. It is the highest May price ever recorded. Since the start of the pandemic in 2020, home prices have jumped 51%. Wages have not. The price-to-income ratio is now between 6 and 7 times in most metros. Thirty years ago, it was 2 to 3. That gap is not sustainable. It is a trap.
BEWARE: Housing defaults have just hit the highest levels since 2011 pic.twitter.com/RV7XNX5Vcj
— Bravos Research (@bravosresearch) June 27, 2025
Housing has been in the dumper since interest rates jumped in the wake of the pandemic 3 years ago, and this week’s data suggests conditions are getting worse. Home sales are about as low as they ever get. Even new home sales, which had been supported by builders’ rate buydowns,… pic.twitter.com/6lj6mnDrkG
— Mark Zandi (@Markzandi) June 27, 2025
Barring a meaningful decline in rates (not caused by recession), it’s unclear what will turn housing around. There are plenty of ideas to help, but policymakers aren’t focused on them. It took a generation for this housing mess to develop; it thus appears it will take a…
— Mark Zandi (@Markzandi) June 27, 2025
BREAKING: US existing home sales fell -0.75% YoY in May, to a 4.03 million annual rate, the weakest May since 2009.
This was also the second-worst May on record and the 4th consecutive monthly YoY decline.
This comes as persistently high mortgage rates continue to hit housing… pic.twitter.com/UIe1g9yC2f
— The Kobeissi Letter (@KobeissiLetter) June 28, 2025
U.S. home prices are 6-7x income vs. 2-3x thirty years ago.
*When central banks do NOT allow the business cycle to function over longer and longer periods of time, they inflate asset prices and price out millions of Americans. https://t.co/eTeINGxSZ6
— Lawrence McDonald (@Convertbond) June 28, 2025
Sources
https://fred.stlouisfed.org/series/DRSFRMACBS
https://www.newyorkfed.org/newsevents/news/research/2025/20250513
https://tradingeconomics.com/united-states/existing-home-sales