May is often considered the peak of the homebuying season. However, this May was a bit sluggish. Microscopic changes in mortgage rates left the market basically static, and mortgage demand remains low as buyers continue to face economic uncertainty. Increased inventory is the big story in many regions, but questions remain about whether unaffordability will stand in the way of increased sales. Let’s take a look at this month’s real estate summary for active adult homebuyers.
Mortgage Rates Show Little Change
All eyes remain on mortgage rates for any sign of movement. Tiny fluctuations tease hopeful buyers and sellers, but rates remain mostly static at just below 7%. As we closed out May and entered the first week of June, rates for a 30-year fixed-rate mortgage (FRM) averaged 6.85%. Rates for a 15-year FRM averaged 5.99%. While this is up from the 30-year FRM rate of 6.81% that brought in the month, rates are down from the week before, signaling that they could remain mostly static for the coming months.
The slight fall in rates wasn’t enough to stop a fall in mortgage demand. Total mortgage application volume dropped 3.9% in the last week of May. Uncertainty likely still plays a role in homebuying hesitation. In recent years, rising mortgage rates have led to limited supply. The first quarter of 2025 brought little hope for an increase in new builds, with construction input prices increasing at 9.7%. However, more sellers are returning to the market, bringing hope that increased inventory will drive down prices to ease the pinch of high rates.
Home Inventory Finally on the Rise
Unsold inventory of homes on the market, nationwide, is 33% higher than this time last year. However, inventory growth is still heavily dependent on location, with the Northeast struggling to catch up with other regions.
Excitingly, inventory has passed pre-pandemic levels in some desirable areas across the Sunbelt and even in Colorado’s ever-popular Mile High City. Denver inventory is the highest it’s been since 2011, with 13,599 active listings in May. However, median close prices in Denver are around $600,000, which is notably higher than the national average.
Home Price Changes Heavily Based on Location
The average home sales price in the U.S. is $503,800, but averages vary substantially by state. Homes in Hawaii average around $844,000, while those in West Virginia sell for an average of $167,168.
Drops in home prices correlate directly with outsized supply, which makes location a crucial factor for homebuyers seeking a bargain. Some metro areas, including Raleigh–Cary, NC; Columbia, SC; Des Moines, IA; Oklahoma City, OK, and Birmingham–Hoover, AL; are becoming more affordable. Unfortunately, prices are still rising in other metros, including Fresno, CA; Greenville-Anderson, SC; Los Angeles, CA; New Haven–Milford, CT; Spokane, WA; Springfield, MA; and many more. Statewide drops in value across Florida; Colorado; Washington, D.C.; California; West Virginia; Texas; Georgia; and Washington state also show signs of a shifting market where more homes are available.
Still, many homebuyers are being priced out of the market. Across the nation, 21.2% of listings are within reach for middle- and upper-middle-income buyers making between $75,000 and $100,000 annually. However, households earning $50,000 can only afford 8.7% of listings. In any case, increased inventory suggests prices are likely to continue the downward trend. For today’s homebuyers, a large down payment could make a significant difference in how much house they can afford.
What 55+ Homebuyers Need to Know About the Housing Market
Overall, the first quarter of 2025 and even the spring homebuying season have been remarkably uneventful. Interestingly, the combination of the lackluster start to the year and confident predictions about largely static mortgage rates seems to have spurred sellers into action. Perhaps those anticipating lower rates decided the wait would be too long, or some stability in a sea of uncertainty was enough to prompt action.
Whatever the reason, options for buyers are growing. Unfortunately, it’s too soon to call this a buyer’s market, which means shoppers must make wise decisions based on reality instead of hopes for the market in 2025.
Many 55+ homebuyers have the potential to exercise homebuying power that younger generations often don’t have. High mortgage rates and home prices are best offset with a generous down payment and a spotless credit score. 55+ buyers often sell an existing house before buying, a portion of which can be used for a down payment. Also, a longer credit history is more forgiving than one that has only developed over a few years, enabling buyers to get the best loan options possible.
- Budget with expectations that the market will see little change. While home prices may continue to drop in locations with rising inventory, preparing for minimal change will allow you to maximize your budget.
- Clean up your credit for the best rates possible. Paying off overdue bills is crucial to removing dings to your credit. Other ways to increase your credit score include asking for higher credit limits, using less than 30% of your available credit, becoming an authorized user of someone else’s credit card, and getting credit for rent and utility payments.
- Reduce costs with your down payment. Your down payment gives you the power to finance less, making mortgage rates less powerful.
Assistance for 55+ Homebuyers
Home buying assistance for 55+ buyers doesn’t always come in the form of a program designated to reduce costs for buyers. Many states have exemptions and other tools to reduce the cost of property ownership for adults over a certain age. For example, many states offer property tax relief for residents over 65 in the form of tax exemptions. When buyers seeking an affordable location combine the benefits of choosing a state where property prices are low with property tax relief, they can cut costs now and in the future. These states currently offer property tax exemptions to mature residents.
- Alabama
- Alaska
- Florida
- Georgia
- Indiana
- Iowa
- Kentucky
- Mississippi
- Nebraska
- New York
- North Carolina
- Ohio
- South Carolina
- Texas
- Washington
- District of Columbia
Mississippi, Ohio, and Kentucky also offer some of the lowest average home prices nationwide, at $180,497, $234,158, and $215,638, respectively. Lower tax costs can help you afford higher monthly payments and cost-of-living increases. In many cases, buyers over 55 can also take advantage of lower prices in age-restricted communities.
Homes are Still within Reach for 55+ Buyers in 2025
The less-than-dynamic changes in the housing market have been discouraging for many. However, they have brought a sense of security for some buyers and sellers planning to enter the market. When little change is expected for mortgage rates and inventory is increasing, the best option for many will be striking while the iron is hot to secure an available home.
For many buyers over the age of 55, age-restricted communities offer many luxuries that exceed typical neighborhoods, enhancing the appeal of a new location. They can also be a surprising source of cost savings.
Make 2025 the Year You Find Your Dream Home
The 2025 housing market presents unique challenges for buyers of all ages, but with the right knowledge, you can turn those challenges into opportunities. By maximizing your down payment and exploring homebuyer assistance programs, you can make the most of your retirement income. And if you haven’t yet considered a 55+ community, you might be surprised by the lifestyle and value these neighborhoods offer.
Ready to find the perfect home in a 55+ community? The team at 55places is here to guide you every step of the way. Contact us today to start your journey toward the ideal home and lifestyle!
