Dear Friends-
There is a peculiar quietness in the American housing market these days.
It is not the quiet of peace.
It is the quiet of a man sitting in his pickup at the edge of a dusty road, engine running, wondering whether he should go forward, turn around, or simply wait until somebody else makes up his mind.
For more than three years, the housing market has been doing something remarkably unexciting.
Up one month.
Down the next.
Up again.
Down again.
Like a tired old porch swing moving in a wind that cannot decide which direction it wants to blow.
Home sales in July declined from the previous month, although they remained 2.9% above a year earlier. Existing-home sales were running at an annualized pace of approximately 4.1 million units, while new-home sales fell 10.5% from the previous month to 607,000.
The numbers tell us something important.
The housing market hasn't collapsed.
But neither has it come roaring back.
It is simply stuck.
And the reason is not particularly mysterious.
Mortgage rates.
The average 30-year fixed mortgage rate is sitting around 6.7%, according to Freddie Mac. That number means something very different to a buyer than it did when money could be borrowed at rates below 3%.
There was a time when people could buy a house and finance it with money so cheap that the bank practically seemed embarrassed to charge interest.
Those days are gone.
And millions of homeowners are sitting on mortgages with rates below 4%.
Now ask yourself this question:
If you owned a house with a 3% mortgage, would you happily sell it and buy another house with a mortgage approaching 7%?
Probably not.
You might love the new house.
You might love the new neighborhood.
You might even love the kitchen.
But you would probably look at the mortgage payment, look at your existing mortgage, and suddenly decide that your old kitchen isn't so bad after all.
That is one of the great forces holding the housing market in place.
People aren't necessarily unwilling to sell.
They are unwilling to surrender cheap money.
And so they stay.
That keeps the supply of existing homes relatively tight.
Existing-home inventory reached approximately 1.54 million units in July, representing about 4.6 months of supply.
That is more inventory than we had during the extraordinarily tight housing market following the pandemic, but it is hardly an ocean of houses.
And when supply remains limited, prices tend to remain stubborn.
The national median home price reached approximately $400,000 in July, up 2.6% from a year earlier.
Existing-home prices were even higher, with the median reaching approximately $434,100.
So we have a strange situation.
Sales are weak.
Mortgage rates are high.
Affordability is difficult.
Yet prices haven't fallen apart.
Why?
Because there simply aren't enough sellers willing to sell.
This is one of those occasions when the housing market reminds us that economics is not always complicated.
Sometimes it is just arithmetic.
Limited supply plus continuing demand equals stubborn prices.
But there is another story unfolding in the new-home market.
Builders have more houses to sell.
There was approximately 9.3 months of new-home supply in June, roughly twice the inventory available in the resale market.
And builders are responding the way businessmen respond when the customer isn't walking through the door.
They negotiate.
They offer incentives.
They cut prices.
They offer discounts.
They throw in upgrades.
According to the National Association of Home Builders, roughly one-third of builders reported cutting prices, with average reductions around 6%, while more than 60% offered incentives.
In other words, the new-home salesman is beginning to discover an ancient principle of commerce:
If the customer won't come to your price, sometimes you have to come to the customer.
And that is good news for buyers.
But it is not necessarily good news for builders.
Housing starts fell sharply in July, down 13.5% from a year earlier, while single-family starts declined 15.7%.
Builders see the inventory.
They see the interest rates.
They see the hesitant buyers.
And they are thinking carefully before putting another expensive house into the ground.
That caution makes sense.
Nobody wants to build a $900,000 house only to discover that the buyer wants an $850,000 house and expects the refrigerator, the blinds and half the closing costs thrown in.
So the market moves slowly.
And underneath all of this is a larger demographic question.
America's population is growing more slowly.
After a temporary increase in population growth in 2022 and 2023, largely associated with immigration, the Congressional Budget Office estimates growth slowed to approximately 0.2% in 2025 and projects roughly 0.3% annual growth through the remainder of the decade.
Slower population growth eventually means slower household formation.
And slower household formation means slower growth in housing demand.
That doesn't mean America suddenly has too many houses.
It means the enormous housing demand we became accustomed to may not continue at the same pace forever.
So where does that leave us?
It leaves us in what I would call a low-activity equilibrium.
Nobody is particularly happy.
Buyers don't like 6.7% mortgage rates.
Sellers don't want to give up their 3% mortgages.
Builders don't want to build houses that sit on the market.
And lenders don't appear particularly interested in returning to the days when money was almost free.
Everybody is standing around looking at everybody else.
And that is where opportunity begins.
Because real estate has never been about simply asking whether the market is good or bad.
The better question is:
Where is the opportunity inside the market we actually have?
That is precisely what we at The Ponce Real Estate Group are watching.
We are not sitting around waiting for the market to return to 2021.
That market is gone.
The smart real estate professional doesn't wish for yesterday.
He understands today.
And he prepares for tomorrow.
For owners, that means understanding the value of your property in today's market rather than relying on what your neighbor received three years ago.
For buyers, it means understanding where sellers are becoming flexible and where builders are offering incentives.
For investors, it means examining cash flow, financing, replacement cost, supply and demand rather than simply hoping that prices will rise.
And for sellers, it means understanding that pricing correctly may be more important than ever.
Because this is no longer the market where you put a sign in the yard on Friday and spend Saturday choosing between seventeen offers.
This is a market where preparation matters.
Knowledge matters.
Negotiation matters.
And experience matters.
The housing market may be moving slowly, but real estate never stops moving entirely.
There are always properties that must be sold.
There are always people who must move.
There are always investors looking for the right opportunity.
There are always businesses expanding, families changing, estates being settled, partnerships dissolving and somebody, somewhere, deciding that today is the day to make a move.
That is where local expertise becomes important.
The Ponce Real Estate Group knows the neighborhoods, the properties, the owners, the investors and the numbers.
We watch what is actually happening on the ground—not merely what the national headlines say is happening.
Because Los Angeles isn't Iowa.
The South Bay isn't Phoenix.
Palos Verdes isn't Austin.
And a four-unit apartment building in Torrance is not the same investment as a new subdivision in Texas.
Real estate is local.
Very local.
A national housing report can tell you that the median price went up 2.6%.
It cannot tell you what the apartment building down the street is really worth.
It cannot tell you which buyer is likely to pay the most.
It cannot tell you whether a particular property should be renovated, held, refinanced or sold.
That's where experience enters the picture.
And that is what The Ponce Real Estate Group brings to the table.
We believe the current market is not a reason to sit on the sidelines.
It is a reason to pay closer attention.
The market has changed.
The rules have changed.
The cost of money has changed.
And successful real estate decisions will belong to those willing to understand those changes rather than complain about them.
So we keep watching.
We watch mortgage rates.
We watch inventory.
We watch rents.
We watch construction.
We watch investors.
We watch what buyers actually pay—not what somebody wishes they would pay.
And most importantly, we watch Los Angeles and the South Bay.
Because that's where we live, work, negotiate and sell.
The housing market may be walking slowly down the road.
But there are still properties along that road.
There are still buyers.
There are still sellers.
There is still opportunity.
And when the market finally decides which direction it wants to go, we'll be watching from the front seat.
—Frank Ponce
The Ponce Real Estate Group
Local Knowledge. Experience. Results.
(310) 503-4158
