Real Estate Rundown July 2025
July 01, 2025
Photo Credit Courtesy of Getty Images via Unsplash
US Home Prices Drop Slightly
U.S. home prices dipped slightly in May 2025, falling 0.1% month over month on a seasonally adjusted basis, marking only the fourth decline in the past decade, according to the Redfin Home Price Index. Annual price growth also cooled to 3.6%, the slowest pace since July 2023. The market shift is being driven by a growing mismatch between supply and demand, with sellers outnumbering buyers amid high mortgage rates and economic uncertainty. Just 31.2% of homes sold above asking in May—the lowest May share in five years. Prices fell in 32 of the 50 largest U.S. metros, with Charlotte, NC seeing the steepest monthly drop (-2.7%), while Nassau County, NY posted the largest increase (2.1%). Year-over-year, New York and several other East Coast cities are still experiencing double-digit growth, while Sun Belt markets like Tampa, Austin, and San Antonio are seeing price declines.
Pending Homes Are on The Rise
Pending home sales rose 1.8% in May, defying expectations and offering a glimmer of optimism for the summer housing market after a sluggish spring. The National Association of Realtors® reported the increase in its Pending Home Sales Index, which tracks contract signings for existing homes—a leading indicator of future sales. Despite mortgage rates remaining elevated at an average of 6.82%, the uptick may reflect improving buyer sentiment amid rising wages and easing economic uncertainty, including a pause on new tariffs. All four U.S. regions saw month-over-month gains, with the West leading at 6%. However, affordability remains a major constraint, with buyers highly sensitive to rate fluctuations. While recent economic stability may help support demand, Fed Chair Jerome Powell signaled that rate cuts aren’t imminent, citing inflation concerns and a tight job market. As inventory grows and price cuts become more common, patient buyers may find improved opportunities in the months ahead.
Interest Rates Remain Unchanged
At its latest meeting, the Federal Reserve held interest rates steady, as expected, signaling a continued cautious stance amid mixed economic signals. The central bank is closely monitoring inflation—which has been pressured by rising goods costs and new tariffs—and a softening labor market, with unemployment projections ticking up to 4.5% for 2025. While housing inflation has eased, new tariffs may push prices higher, leading the Fed to adopt a wait-and-see approach before making future rate adjustments. Mortgage rates, which loosely track Treasury yields, could stay elevated for now, further dampening housing market activity despite growing inventory and buyer bargaining power. Home sales remain flat year-over-year, and although there’s strong pent-up demand, affordability challenges and economic uncertainty are keeping many buyers on the sidelines. With homebuilder confidence low and construction slowing, the traditional spring market may shift into summer—assuming rates and prices ease in the months ahead.
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