Circle Squared Investments founder Jeff Sica discusses the impact of the real estate industry on the U.S. economy and markets.
If you’ve flipped through the real-estate pages lately – or just tried to pull up Redfin or Zillow – something’s glaringly obvious. Nobody’s moving and nobody’s buying homes right now.
Recently, I took a glance on Zillow at one of the hottest markets in Florida, which is Route 30A in the panhandle. Where it was once almost impossible to see a red dot of something for sale, it now looks like a heat map that a B-52 Stealth bomber just lit up with red dots of bunker busters.
You’ve got homes sitting on the market for weeks – or months – with major price reductions while would-be buyers stare at high mortgage rates, stagnant sales and some places they bought thinking that work-from-home office rules would last forever.
Federal Reserve Chairman Jerome Powell testifies before the Senate Committee on Banking, Housing, and Urban Affairs on Captiol Hill on June 25, 2025. (Kent Nishimura / Getty Images)
Unless the Fed and Jerome Powell get their act together, our real estate ecosystem will become one large stagnation.
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Why It Feels Like Everyone’s Frozen
You’d think summer would spring things to life – but over the summer of 2025? Crickets. June’s existing-home sales clocked in at just 3.93 million – a 2.7% drop from May and treading water year-over-year. That’s the slowest pace since last September. Meanwhile, new-home sales barely budged at 627,000 annualized, still 6.6% below June 2024. It’s like everyone hit the pause button after watching the latest “Million Dollar Listing” show on Bravo.
Golden Handcuffs, Frozen Dreams and Soaring Inventory
We’re seeing a phenomenon called “golden handcuffs.” People aren’t moving – not because they love their homes, but because they can’t afford to leave. Jobs are cooling, relocation perks are rare, and many hold equity in homes they bought years ago at COVID low interest rates and they simply can’t pivot without sacrificing financial stability.
It’s a market held hostage by its own past and unemployment rates hovering near 4.3% aren’t helping the problem. And, to boot, there were so many people who dreamed of never returning to the day-to-day office grind with their mountain or beach getaway, and now the boss has recalled everyone back in the office for the old 9 to 5.
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Sure, inventory is technically up – active listings rose 24.8% year-over-year in July, hitting post-pandemic highs. But higher inventory hasn’t helped much. That’s because affordability, not availability, remains the choke point.
Meanwhile, in Sun Belt markets like Austin or Miami, price collapses are already underway – nearly 15–19% drops since 2022. Yet that doesn’t mean buyers are flooding in. Not when paying tens of thousands more a year in insurance and property costs has become the new normal.
In fact, rising homeowners’ insurance premiums are up from an average of $2,656 in 2021 to more than $3,303 in 2024 and in some parts of the country you can’t even buy insurance on your home without it be an astronomical cost.
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Mortgage Rates Reach Their Lowest Level Year To Date
The average 30-year fixed rate mortgage was 6.58% this week, which is the lowest level since October 2024. That may look like good news on paper – but back in December, industry forecasts said 6% rates could unlock 6.2 million households to afford a median-priced home. The catch? Rates aren’t there yet, and even if they fall to that benchmark, affordability issues run deeper.
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Can Jerome Powell Come to the Rescue?
The short answer is yes.
President Donald Trump has been dealing out almost a weekly dose of punishment on Fed Chair Jerome Powell. And rightly so. While mortgage rates may not be tied to the Fed and are more closely linked to the 10-year Treasury yield influenced by a broader range of factors, Powell can spur a chain reaction to start the spin cycle of a lower interest rate environment in America.
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Americans need it more than anything right now or the number of stalled sellers on the market will continue to climb on a monthly basis.
During a recent congressional testimony, Powell said it wasn’t “obvious” that lowering interest rates would reduce housing costs, arguing that a long-term supply shortage was the source of elevated prices.
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However, that narrative of inventory is aggressively flipping and the reality is that some people aren’t moving because of rising job uncertainty and being unwilling to get out of their 3% mortgage rate and move into a new house at 6.6%. It’s incredibly difficult to make the move to a bigger house with those two factors looming for most home buyers.
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In many countries around the world, now including Italy, France, Spain, Ireland and Germany, mortgage rates are sub 4% right. Plenty of other countries are between 4% and 5% while we are hovering close to 6.6%. In addition, the inventory level as of July was more than 1,100,000 which reverts us back to pre-COVID levels.
It’s time for Powell to stop pontificating about when to lower interest rates and start acting. If he doesn’t, Americans will ultimately be a day late and much more than a dollar short.
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