The national real estate market in June 2025 is defined by a complex blend of economic headwinds, stabilizing forces, and shifting buyer and seller dynamics. The ripple effects of heightened economic uncertainty in April were evident in May’s real estate performance—but there are signs that brighter days may be ahead.
A Look Back to Move Forward: April’s Uncertainty Impacts May Sales
In April, a sharp spike in economic uncertainty shook both consumers and markets, leading to a pullback in new contracts—an effect that showed up in a dip in May’s closed sales. However, there's good news: the uncertainty index dropped significantly in May and is expected to fall further with the next reading in early July, potentially setting the stage for a stronger summer.
Simultaneously, the stock market, which plunged in March and April, staged a remarkable rebound in May. If this momentum continues—and is coupled with growing consumer confidence—we could see a pickup in June and July sales activity.
Photo Courtesy of Compass
Mortgage Rates: High, But Stable
Mortgage rates jumped earlier this spring in response to tariff-related shocks but have now leveled off, holding just below 7%. While slightly lower than a year ago, rates remain too high to unlock substantial buyer demand, especially for more rate-sensitive segments of the market.
Photo Courtesy of Compass
Home Prices Climb, Listings Surge
Despite the market's challenges, median home prices continued their upward trajectory in May and may hit their calendar-year peak in June. This pattern is typical for spring, fueled by seasonal demand and an uptick in luxury home sales. Condo and co-op prices also posted modest year-over-year gains, although they are facing more headwinds than single-family homes.
Inventory, on the other hand, tells a different story. The number of active listings rose both month over month and year over year, reaching the highest levels seen in five years. If this trend holds, sellers may find themselves in increasingly competitive territory—especially if buyer demand doesn’t rise in tandem.
Photo Courtesy of Compass
Sales Volume: A Tale of Two Months
While May saw more homes sell than April (as is seasonally expected), total sales were down compared to May 2024. This is largely because May closings reflect April’s conditions—when financial markets were in turmoil and buyer confidence was shaky. With improved conditions since then, June could tell a more optimistic story.
Photo Courtesy of Compass
Inventory Pressure and Pricing Power Shift
The Months-Supply-of-Inventory (MSI)—a key metric for measuring the balance between supply and demand—hit its highest level in over six years for all home types. This signals a softer market overall. The condo/co-op sector, in particular, continues to struggle due to insurance challenges and mounting costs tied to construction upgrades, which have hurt sales in many regions.
As a result of more inventory and fewer sales, price reductions are becoming more common—reaching their highest level since 2019. For sellers, this makes strategic pricing and professional marketing more important than ever. For buyers, especially those tracking price-reduced listings, the current market offers rare opportunities to negotiate favorable deals.
Photo Courtesy of Compass
Demographic Shifts and Demand Dynamics
Population growth over the past 12 months has been concentrated in urban areas, largely driven by immigration. However, recent changes in immigration policy are likely to reshape this trend. Anecdotally, the number of foreign homebuyers has dropped in 2025—adding another layer of complexity to demand forecasts, particularly in coastal and gateway markets.
Photo Courtesy of Compass
Looking Ahead: Eyes on Policy and Interest Rates
Federal budget deficits and looming tax reforms are also influencing the broader financial landscape. Moody’s downgraded U.S. debt in May, citing concerns about long-term fiscal sustainability. This could affect investor appetite for U.S. bonds and, by extension, put upward pressure on mortgage rates. That said, interest rate movements are notoriously difficult to predict, influenced by a wide array of domestic and global factors.
Photo Courtesy of Compass
A Two-Speed Market: Affluent Buyers vs. Stressed Households
Not all buyer groups are affected equally. Affluent buyers—often all-cash—have benefited from the stock market recovery and home appreciation. Meanwhile, younger and less wealthy buyers are still struggling with elevated rates, rising debt, and affordability constraints.
Photo Courtesy of Compass
Final Thoughts
June 2025 is shaping up to be a pivotal month. While the market faces undeniable headwinds—from policy shifts to affordability concerns—it also shows signs of resilience, especially with improving consumer sentiment and a recovering stock market. Whether you're buying, selling, or watching from the sidelines, staying informed and nimble will be key as we head into the second half of the year.
Photo Courtesy of Tina Ginter Photo
Need help navigating today’s market? The team at The Blackshaw Messel Group is here to guide you every step of the way—whether you're buying, selling, or simply exploring your options—with expert advice, integrity, and unmatched service tailored to your real estate goals.
