It’s becoming clear that buyers aren’t as eager to buy a house as they were a few months ago. More sellers are putting their houses on the market, but there are fewer multiple offers, fewer houses selling at or above list price, and houses at all price points are taking longer to sell.

On top of that, there are fewer new-construction houses being sold. According to housing economists, it’s likely that fewer than 650,000 newly built houses will be sold in 2025. That’s only about twice as many new homes sold as in the depths of the housing crisis 15 years ago.

At the recent National Association of Real Estate Editors annual conference in New Orleans, housing experts and real estate reporters discussed why the slowdown in real estate is happening.

There was wide consensus that higher interest rates combined with ever-higher prices have curtailed buyer enthusiasm. With interest rates hovering around 6.8%, homes are simply less affordable to a large swath of the population.

Redfin, the real estate brokerage company, points to two main reasons for the slowdown: Housing costs are still soaring, with home-sale prices up 1.6% year over year to a record high and mortgage rates sitting near 7%; and many would-be buyers are holding off due to widespread economic uncertainty and recession jitters.

It didn’t help that the Bureau of Economic Analysis recently announced that real gross domestic product decreased at an annual rate of 0.5% in the first quarter of 2025 (January, February and March), according to the third estimate. In the fourth quarter of 2024 (October, November and December), real GDP was 2.4%. That’s a downward swing of nearly 3% and supports the idea that buyers may indeed be jittery.

But don’t discount rising prices. According to the Census Bureau, the average sales price of new houses sold in May 2025 was $522,200.

How much money do you need to earn to afford to buy a home for $522,000? If you put down 20%, that’s $104,000 in cash you need to avoid paying private mortgage insurance, a large chunk of savings that many first-time home buyers simply don’t have. Plus you also need three months’ of cash reserves and some cash to actually move into your new home.

But after your down payment, you’ll still need a mortgage of $418,000. To comfortably afford that mortgage, you’ll need an income of $100,000 to $125,000 a year. The median family income for a family of four is around $119,000, the Census Bureau says. But if you dig down into the state data, the median household income for a family of four varies, from $96,161 in West Virginia to $159,676 in Connecticut. The average price of a house varies, too, but buyers don’t want to buy a home and then find out they can’t afford the insurance, maintenance and upkeep that goes along with it.

So, what will help the housing market? Lower interest rates could help make homes more affordable, until competition for those homes heats up again and prices rise. Unfortunately, the Mortgage Bankers Association’s new forecast calls for rates to decline slightly, to 6.7% by the end of 2025.

Home builders could build more houses, but the ones they have already built aren’t selling well. That could change quickly with lower interest rates, but the price would still be sky high. There is a movement brewing to push for changes in local zoning laws to allow smaller new homes to be built.

Ilyce Glink is the CEO of Best Money Moves and Samuel J. Tamkin is a real estate attorney. Contact them through the website ThinkGlink.com.