The existing home sales market has experienced significant shifts throughout 2024 and into 2025, with notable recovery patterns emerging alongside changing inventory dynamics and mortgage rate movements. The latest data reveals a market that reached peak activity in late 2024 before showing signs of moderation, while inventory levels have provided much-needed relief to buyers across the country.
The Recovery Story: Peak Sales Activity in Late 2024
The most significant development in the existing home sales market came in December 2024, when sales reached a seasonally adjusted annual rate of 4.29 million units. This represented a substantial increase from the 3.93 million units recorded in June 2024, marking a clear recovery trajectory that had been building throughout the second half of the year.
The December peak was followed by a period of moderation in 2025, with sales stabilizing around 4.0-4.1 million units through July. This pattern suggests that the market found a new equilibrium after the initial recovery surge, with buyers and sellers adjusting to the evolving market conditions.
Monthly Sales Trends Show Clear Recovery Pattern
The monthly sales data reveals a compelling story of market recovery, with sales activity showing consistent improvement from mid-2024 through the end of the year. The trajectory demonstrates how the market responded to changing economic conditions and interest rate movements.
The chart above illustrates the complex relationship between existing home sales and mortgage rates. While the traditional inverse relationship between rates and sales activity is evident, the data shows that sales activity remained resilient even as rates fluctuated throughout 2024 and 2025. The December 2024 peak occurred despite mortgage rates remaining elevated above 6.8%, suggesting that other factors were driving buyer activity.
Inventory Relief: A Major Shift in Market Dynamics
One of the most significant developments in the existing home sales market has been the substantial increase in inventory levels. After reaching a low of 1.14 million units in December 2024, inventory has steadily increased to 1.55 million units by July 2025, representing a 36% increase in available homes for sale.
This inventory growth has been accompanied by an increase in months of supply, which rose from 3.2 months in December 2024 to 4.6 months in July 2025. This shift represents a meaningful change in market dynamics, moving from a seller's market toward more balanced conditions that favor buyers.
State-Level Inventory Patterns Show Regional Variations
The inventory story varies significantly by state, with California showing particularly dramatic changes in listing activity. The Golden State has experienced substantial growth in active listings, reflecting both increased seller activity and potentially longer market times.
California's inventory growth is particularly noteworthy, with active listings increasing from 36,174 in January 2024 to 62,030 in October 2024, representing a 71% increase. This dramatic growth in available inventory has provided significant relief to buyers in one of the nation's most challenging housing markets.
Mortgage Rate Trends: Declining Rates Support Market Activity
The mortgage rate environment has been a key factor in shaping existing home sales activity throughout 2024 and 2025. After reaching peaks above 7% in early 2024, rates have shown a general downward trend, providing support for buyer activity even as inventory levels increased.
The mortgage rate trends show a clear pattern of volatility followed by stabilization. After peaking at 7.24% in April 2024, rates declined to 6.08% by October 2024, providing a significant boost to buyer affordability. While rates have fluctuated since then, they have generally remained below the 7% threshold, supporting continued market activity.
Market Implications: A More Balanced Environment
The combination of recovering sales activity, increasing inventory levels, and stabilizing mortgage rates has created a more balanced market environment. This shift represents a significant change from the extremely tight conditions that characterized much of 2023 and early 2024.
Buyer Benefits from Increased Inventory
The substantial increase in inventory levels has provided several benefits to buyers. With more homes available for sale, buyers have greater choice and negotiating power. The increase in months of supply from 3.2 to 4.6 months represents a meaningful shift toward more balanced market conditions.
Seller Adaptation to New Market Dynamics
Sellers have had to adapt to the changing market conditions, with increased competition requiring more strategic pricing and marketing approaches. The longer market times reflected in the increased months of supply suggest that sellers may need to be more flexible in their expectations.
Regional Variations: California Leads Inventory Growth
The data reveals significant regional variations in market conditions, with California showing the most dramatic changes in inventory levels. This regional variation highlights the importance of understanding local market dynamics when making real estate decisions.
California's 71% increase in active listings from January to October 2024 represents a fundamental shift in that market's dynamics. This growth in inventory has provided much-needed relief to buyers in one of the nation's most expensive and competitive housing markets.
Looking Ahead: Market Stability and Growth Potential
The existing home sales market appears to be finding a new equilibrium, with sales activity stabilizing around 4.0-4.1 million units and inventory levels providing better balance between supply and demand. The declining trend in mortgage rates, particularly the recent drop to around 6.16% in October 2025, suggests continued support for buyer activity.
The market's ability to maintain sales levels despite increasing inventory suggests underlying strength in buyer demand. This resilience, combined with the improving inventory situation, points to a market that is becoming more sustainable and accessible to a broader range of buyers.
Conclusion: A Market in Transition
The existing home sales market has undergone significant transformation throughout 2024 and 2025, evolving from extremely tight conditions to a more balanced environment. The December 2024 peak in sales activity marked a high point in the recovery, while the subsequent stabilization suggests the market is finding its new normal.
The substantial increase in inventory levels, particularly in markets like California, represents a fundamental shift that benefits buyers while requiring sellers to adapt to new market realities. The declining trend in mortgage rates provides continued support for market activity, suggesting that the existing home sales market is well-positioned for continued stability and growth.
As the market continues to evolve, buyers and sellers alike will need to stay informed about these changing dynamics to make the best decisions for their individual circumstances. The data suggests that the market is moving toward a more sustainable balance that can support healthy levels of activity while providing better opportunities for all participants.
