Overview: The Housing Market in August 2025
As summer comes to an end, the housing market typically cools down. This August, existing-home sales remained relatively unchanged, following a long period of sluggish sales due to elevated mortgage rates and limited affordable inventory. However, key economic indicators suggest a direction of improvement: mortgage rates are nearing a 12-month low, and although inventory levels decreased that month, they remain higher than they were at this time last year. Overall, the direction of the 10-year Treasury yield implies that mortgage rates will remain relatively low, which will help boost home sales by expanding the pool of eligible buyers.
From a broader economic perspective, all eyes are on the Federal Funds Rate cuts. The primary goals of the Federal Reserve are to maintain maximum employment and price stability in the U.S. economy. While inflation is on the rise and moving further away from the Fed's target rate, the labor market is weakening with low monthly job additions. Therefore, several price cuts are anticipated in the coming months. The cumulative job additions over the past four months are the weakest since the COVID-19 pandemic, yet the total level of employment is higher than the pre-pandemic levels, sustaining high consumer spending.
In August 2025, the upper limit of the Federal Funds Rate remained at 4.5%. Although the Federal Reserve began cutting the short-term rate in September of 2024, inflation continued to rise above its target. Consequently, the Fed announced that it would maintain a rate range of 4.25%-4.50% until inflation decreases.
In August, a total of 22,000 jobs were added to the U.S. labor market. Overall, total nonfarm employment showed little change since April 2025. In August, job gains in healthcare were partially offset by losses in Federal government employment and in mining, quarrying, and oil and gas extraction jobs.
The level of total housing inventory was at 1.53 million in August, down by 1.3% from July and up by 11.7% from August 2024. August's unsold inventory was equivalent to 4.6 months supply, unchanged from July and up from 4.2 months in August of last year.
In July, privately-owned housing starts decreased to a seasonally adjusted rate of 1.31 million. This decrease was 8.5% below the revised July estimate and 6.0% below the revised August 2024 estimate. There were 890,000 single-family starts in August, down by 7.0%% from 957,000 in July.
Another measure of housing construction, building permits issued, decreased to 1.33 million in August. Permits were down 3.7% from July and 11.1% from August 2024. Single-family authorizations were at a rate of 856,000, 2.2% below the revised July rate of 875,000.
