Falling Home Sales? No Need to Sound The Alarm.
By Rob Jafek, Principal | Boomerang Capital Partners, LLC
A recent New York Times article, The Housing Market Was Supposed to Recover This Year. What Happened? sounded the alarm over falling home sales. The authors highlighted how housing activity, by April 2025, had slowed to its lowest pace since the mid-1990s—despite early-year optimism from economists. Mortgage rates had unexpectedly spiked. Buyer urgency faded. Transaction volume was down. All true.
But much of the media reaction, including this article, has leaned heavily on sales volume as if it were a direct stand-in for home values. That assumption is not only flawed — it’s a recurring source of fearmongering in real estate journalism.
To make matters worse, this confusion isn't limited to year-over-year sales comparisons. In another example, Scottsdale, Arizona was recently touted as a “better housing market” than Austin, Texas. The basis? Scottsdale posted a higher total dollar value of real estate transactions, thanks in large part to a few ultra-luxury sales. But again, this says little about actual price trends or accessibility in either market.
These are classic examples of a widespread issue, so let’s make a clear distinction: volume = how many homes are bought and sold and price = how much they’re being bought and sold for.
And falling volume doesn’t mean falling prices. In fact, today’s housing market - with fewer houses being sold - is defined by tight supply, rate lock-in, and risk aversion, not price erosion.
In April 2025, existing-home sales declined to levels not seen in decades. Yet prices were up for the 22nd straight month. Why? Because most homeowners are sitting on sub-4% mortgage rates and aren’t interested in listing unless absolutely necessary. Meanwhile, buyers are more selective, faced with rates nearing 7%. The result: a sluggish market in volumes, not in price! This scenario—low activity, firm prices—is far from unprecedented.
We’ve Seen This Before. More than Once.
In the early 1980s, mortgage rates soared to 18%. Home sales fell sharply, but prices remained mostly stable. Few people could afford to buy, but just as few were willing to sell. During the first months of the COVID-19 pandemic in 2020, housing activity froze. Sales volume cratered and pundits warned of a price collapse. Instead, prices soon exploded upward as low rates and remote work policies reshaped buyer demand.
In contrast, the 2008 crisis involved a full collapse in both volume and prices. A flood of foreclosures and distressed inventory created forced selling pressure. That’s not what we’re seeing today. There’s no wave of underwater owners or sudden inventory surge.
A Local Example: Scottsdale vs. Austin
Nowhere is the volume vs. value confusion more apparent than in the recent media comparisons between Scottsdale, AZ and Austin, TX.
Reports have noted that Scottsdale is outperforming Austin—based on total dollar value of transactions. But this is a shallow measure. Scottsdale has seen a rise in luxury listings, with homes priced well over $5 million. Just a few such sales can dramatically boost total volume, even if unit sales are low and median prices are flat or declining. In fact: Scottsdale’s median home price is ~$849K and down ~0.8% year-over-year; Austin’s metro-wide median is $449K (in-city ~$595K), down ~1.6% YoY; and yet Austin’s pending sales are up 16%, and inventory is growing—suggesting a more dynamic, buyer-friendly market.
So, which is “healthier”? The market with a few splashy deals? Or the one with improving affordability and rising inventory? Using total transaction volume as a proxy for market strength elevates outlier sales while masking real trends in affordability, supply, and demand.
What to Watch Instead
To truly understand housing market health, we need to look beyond sales volume. Instead, look at the same things you’ve always looked at:
Inventory levels: Are homes sitting longer or selling quickly?
Days on market: Are properties moving faster or stalling?
Price-to-list ratios: Are buyers bidding up or negotiating down?
Distressed sales: Are foreclosures rising, or still historically low?
Right now, most signs point to stasis, not collapse. There is less urgency, yes — but also no need to panic. The housing market isn’t crashing. It’s catching its breath.
TLDR: Don't Let Volume Fool You
The housing market today is like a slow-moving chess game. Transactions are down, but values are holding. That’s not a sign of collapse—it’s a sign of tension. Most owners don’t need to sell. Most buyers can wait. And the result is a cautious standoff, not a downward spiral.
Scottsdale has been more consistent than Austin for a long time - what did you think was going to happen when a bunch of tech billionaires moved to a small market and all wanted big houses? A few luxury closings don’t mean the broader market is stronger, but it did drag the average up, and when those stop the average will move down. Likewise, falling unit sales nationwide don’t mean home prices are crashing, even if every realtor you know is unhappy.
Price and volume move independently. The moment we forget that, we risk falling for the same cycle of misinterpretation that’s plagued real estate coverage for decades. What should you do? Focus on your markets and your trade. If you’ve been in this for any period of time, you’ve seen these cycles. Focus on the fundamentals and we’ll see you at the next peak or valley.