What’s Happening in the Housing Market and How Veterans Can Take Advantage

The U.S. housing market has been a rollercoaster for the past several years, swinging from a frenzied, competitive seller’s market to a more subdued, and at times, perplexing, landscape. As of mid-2025, a new trend is emerging: a curious “holding pattern” where buyers are hesitant, sellers are delisting their homes, and more inventory is slowly coming to market.

This moment of uncertainty, however, presents a significant opportunity for savvy homebuyers, especially those with the unique advantages of a VA loan. At VeteransLoans.com, we believe that understanding these market shifts is the first step to making a smart move. Let’s break down what’s happening, what’s causing it, and how you can position yourself to win.

The Current State of the Housing Market: A Standoff

The housing market in mid-2025 is not defined by a crash, but rather by a standoff between buyers and sellers. On the one hand, a steady increase in available homes is providing a much-needed increase in inventory, giving buyers more options than they’ve had in years. However, high prices and elevated mortgage rates are keeping many prospective buyers on the sidelines, leading to a surge in delistings from frustrated sellers.

Here’s a closer look at the key trends:

• Buyers are holding back: High home prices, which have remained sticky despite slower growth, combined with elevated mortgage rates (hovering around 6.6%-6.7% as of August 2025), have created a major affordability challenge. Many would-be homebuyers, feeling squeezed by these costs, have adopted a “wait-and-see” approach. The result is a drop in pending sales and a higher contract cancellation rate.
• Delistings are surging: In response to the lack of buyer activity, many sellers are pulling their properties off the market. Rather than accept a lower-than-desired price or make successive price cuts that signal desperation, sellers with significant home equity are choosing to delist and wait for the market to improve. This surge in delistings, which in some markets exceeds the number of new listings, creates a cyclical “holding pattern” where buyers can’t find fresh options and sellers refuse to budge on price.
• Inventory is slowly rising: Despite the rise in delistings, the overall supply of homes for sale has continued to increase. As of July 2025, active listings reached a post-pandemic high, with inventory up nearly 25% year-over-year. This is especially true in the South and West, where there was a major boom in pandemic-era prices.
• Prices are stabilizing, with some regional drops: While the national median list price has remained largely flat, this masks significant regional variation. Prices are beginning to see meaningful declines in many Southern and Western metros that saw the most dramatic price appreciation during the pandemic, such as Austin, Texas, and Tampa, Florida.

So, what does all of this mean for you, a Veteran or service member looking to use your VA loan?

What’s Causing This Housing Market Standoff?

This complex market dynamic is the result of several intertwined factors:

• Affordability Issues: The simple reality is that the combination of stubbornly high home prices and elevated interest rates has made homeownership financially out of reach for many. As of July 2025, the typical monthly mortgage payment is over $1,200 more than it was just a few years ago.
• Seller Expectations: Many sellers are still living in the “golden age” of the market, when homes were flying off the shelves for well over the asking price. They are unwilling to adjust their expectations to the current climate, leading to a disconnect between what they want and what buyers can afford.
• Buyer Hesitation: Beyond just finances, buyers are also hesitant due to a fear of buying at the wrong time. They worry about home values dropping after they purchase and making a significant financial mistake.
• The “Lock-In” Effect: Many current homeowners are sitting on mortgages with ultra-low interest rates (3% or less). They are hesitant to sell their homes and trade their low rate for a new loan at today’s much higher rates, which limits the number of homes coming to market.

How to Take Advantage of This Cooling Market with a VA Loan

While a market in a “holding pattern” can be frustrating for those on the sidelines, it’s actually an incredible time for prepared and patient VA homebuyers. The VA loan provides unique benefits that can give you a significant advantage when the market shifts from a seller’s to a more balanced environment.

1. Leverage Your Negotiating Power

This is the biggest advantage of the current market. During the bidding wars of 2021-2022, buyers often had to make offers with no contingencies, waive inspections, and offer well over the asking price. That is no longer the case. With homes sitting on the market for longer (the median time on the market is now 58 days, up from a year ago), sellers are becoming more willing to negotiate.

• Price Reductions: Don’t be afraid to make an offer below the asking price, especially if the home has been on the market for a while.
• Seller Concessions: A major benefit of a VA loan is the ability to ask the seller to pay your closing costs. The VA allows sellers to pay up to 4% of the loan amount in concessions. This can cover your VA funding fee, appraisal fee, title insurance, and other administrative expenses, potentially saving you thousands of dollars in out-of-pocket costs.
• Request for Repairs: As a VA buyer, you have the right to request that a seller address any issues identified in the VA appraisal that violate the Minimum Property Requirements (MPRs). In a less competitive market, sellers are more likely to agree to these repairs to secure the sale.

2. Take Advantage of the “Lack of Competition”

With many buyers on the sidelines, you face far less competition than you would have a few years ago. This provides a golden opportunity to find your dream home without having to rush into a decision.

• More Time for Due Diligence: You can take your time to thoroughly inspect a property, review all disclosures, and ensure it’s the right fit for your family.
• Less Stress: The pressure of a seller’s market is gone. You can make an offer you’re comfortable with and not worry about being outbid by dozens of other buyers.

3. Use the VA Loan’s Built-in Advantages

The benefits of the VA loan are even more powerful in a cooling market.

• No Down Payment: This is the signature benefit. In a market where high prices require larger down payments, the VA loan’s no-down-payment feature is a massive financial advantage that helps you get into a home sooner.
• No Private Mortgage Insurance (PMI): Most conventional loan programs require PMI if you put less than 20% down, which is a significant added monthly cost. The VA loan has no PMI, which can save you hundreds of dollars per month and increase your buying power.
• Lower Interest Rates: VA loan rates are consistently among the most competitive on the market due to the government guarantee. This can help offset the current elevated interest rate environment, making your monthly payment more affordable.
• Refinance Opportunities: Many economists and financial experts anticipate that as inflation cools and the Federal Reserve begins to lower its benchmark rate, mortgage rates will eventually follow. With a VA loan, you can take advantage of the VA’s streamlined Interest Rate Reduction Refinance Loan (IRRRL) program. This no-hassle refinance option allows you to easily lower your rate once they drop without a new appraisal or extensive underwriting, making it a great long-term strategy. Learn more about the VA IRRRL refinance.

4. Preparation is Your Secret Weapon

In any market, preparation is key. In today’s market, it gives you a distinct edge.

• Get Your Finances in Order: Check your credit report and work to improve your credit score. This will help you secure the best possible rate.
• Obtain Your COE: Make sure you have your Certificate of Eligibility (COE) ready. This proves you are eligible for the benefit.
• Get Pre-Approved: A VA loan pre-approval is non-negotiable in this market. It shows sellers and their agents that you are a serious, qualified buyer and can help you close faster.

The Bottom Line

The current housing market is in a state of flux, but it’s not an impossible environment for homebuyers. For active-duty service members and Veterans, this period represents a chance to reassert your power as a buyer and secure a home on your terms. With more inventory and a willingness from sellers to negotiate, your VA loan benefits can be leveraged to secure a better deal, lower your upfront costs, and buy a home you love.

Don’t wait for the market to fully shift. The time to prepare is now.

At VeteransLoans.com, we are experts in VA loans and have our finger on the pulse of the market. Our team is ready to guide you through every step of the homebuying process, helping you take full advantage of this unique opportunity.

• Get Pre-Qualified: Start your journey by visiting veteransloans.com/prequalify. It’s the easiest way to find out what you qualify for and begin your home search with confidence.
• Speak with a VA Loan Expert: For a personalized consultation and answers to all your questions about the current housing market, call us today at 1 (888) 232-1428.

Your service has earned you this benefit, and we are honored to help you use it to win in today’s real estate market.