The Seattle real estate market has taken buyers and sellers on a rollercoaster ride so far in 2025. With high mortgage rates, shifting buyer demand, and rising inventory, it’s no wonder so many people are asking: Will home prices drop in the second half of the year? Whether you're planning to buy your first home, sell your current property, or just stay informed, this mid-year update will help you understand what’s happened so far and what to expect next.

In this post, you'll get a clear breakdown of Seattle's current housing trends, including where mortgage rates are heading, how buyer behavior has shifted, and why inventory is surging. Most importantly, you’ll walk away with grounded predictions and a smarter perspective for navigating the rest of the year.

Mortgage Rates in 2025: The Driving Force Behind Buyer Behavior

As of July 1st, 2025, mortgage rates for a 30-year fixed loan are sitting at 6.67%, which is near the lowest rate we've seen this year. Here's how they’ve moved so far:

• January 6th: 7.16%

• March: Dropped to 6.75%

• Late March: Climbed again after economic uncertainty (e.g., tariffs and stock market drop)

• July 1st: Down to 6.67%

Why this matters: Lower rates improve buyer affordability. Even a small rate drop increases purchasing power, which often boosts buyer activity. However, stock market instability earlier this year hit Seattle buyers hard—especially tech workers with equity-based income or portfolios tied to the market.

Inventory is Rising: What That Means for Buyers and Sellers

After years of tight supply, Seattle is finally seeing a release of “pent-up inventory”—homes that were held off the market due to uncertainty or owners locked into low mortgage rates.

• January listings: 993

• May listings (peak): 1,867 — the highest in 3 years

• June listings: Slight dip to around 1,500

What this means:

• Sellers: More competition. Your home will need strong pricing and marketing to stand out.

• Buyers: More choices. You have more negotiating power and less pressure to make rushed decisions.

Buyer Demand is Steady—but Softer Than 2022 Frenzy

The number of homes going under contract has steadily grown and is consistent with what we’ve seen in recent years:

• June 2025: 934 pending sales

• April 2024: 900 pending sales

• May 2023: 858 pending sales

We’re not back to the breakneck pace of 2022, but buyer activity remains solid, especially considering the higher rates.

Home Values: Are Prices Falling?

The average home price in Seattle has continued to trend upward, despite the shifting market dynamics:

• January 2025: $917,000

• April 2025: $1.046 million

• May 2025: Slight dip to $1.024 million

• June 2025: Rebounded to $1.117 million

While some individual sellers—especially those who bought during the COVID peak—are struggling to sell for a profit, the broader market is still appreciating. Condos and townhomes, however, are more price sensitive and may offer better value opportunities for buyers.

Days on Market: Back to Normal

• Current average: 22–23 days

• 2024 low: 18 days

• 2023 low: 19 days

• 2022 low: 9 days (an outlier)

Homes are no longer flying off the market in under a week, but they’re still selling within a healthy timeframe.

Sales-to-List Price Ratio: No More Wild Bidding Wars

• Feb–Apr 2025: Homes selling ~1% over asking

• May 2025: Sold at asking price

• June 2025: Sold for 99.9% of asking

This is a return to normalcy—sellers are pricing realistically, and buyers are not overpaying like they did in 2022.

So, Is the Market Crashing?

In short, no. While some headlines might suggest doom and gloom, the data paints a different picture:

• The market is stabilizing, not collapsing.

• Buyers are active, especially when rates dip.

• Sellers can still succeed, but need to be strategic.

For most people, this is a healthy, balanced market with opportunities on both sides.

Forecast for the Second Half of 2025

1. Interest Rates May Dip Slightly

We may see rates fall to around 6.5%, which could bring some sidelined buyers back into the market. Even now, savvy buyers are negotiating rate buy-downs through seller credits.

2. August: The Quiet Opportunity

Late summer often brings a lull. Homes that have been sitting longer may offer buyers better deals and more room to negotiate.

3. September Surge

Expect a bump in activity after Labor Day:

• More listings from sellers who waited out the summer

• More buyers re-entering the market if rates fall

4. Continued Market Stability

Unless there’s a major economic or geopolitical shake-up, the Seattle market is likely to remain stable through the end of 2025.

Final Thoughts: What Should You Do Next?

If you're thinking about buying or selling a home in Seattle, now is the time to start planning. Buyers have more options and negotiating power. Sellers can still benefit from rising prices—if they price right and prepare well.

The key is to work with a local expert who knows how to navigate shifting conditions and build a strategy that fits your goals.

Ready to Make a Move?

Whether you're buying, selling, or just want to talk strategy, I’d love to help. Reach out by email or text to book a free consultation.

And if you’ve got a prediction for where the Seattle market is heading next, drop it in the comments—I’d love to hear your take.