Real Estate Market Update July 2025

Real Estate Market Update July 2025

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Quick Take

  • Affordability remains an issue nationwide, as the median monthly P&I payment ticked up by 10.15% on a year-over-year basis at the end of April.
  • Mortgage rates have continued to hold the mid-six percent range that we’ve seen for over six months.
  • Inventories continue to climb throughout the country, while home sales start to slow down.
  • The recent global economic and geopolitical instability that we’ve seen likely won’t help the market, as uncertainty may lead people to stay where they are.

Note: You can find the charts & graphs for the Big Story at the end of the following section.

*National Association of REALTORS® data is released two months behind, so we estimate the most recent month's data when possible and appropriate.

The housing affordability issue continues to grow

As we all know, housing affordability has been a problem on a national scale for quite a few years at this point. At this point in time, many find it hard to believe that the housing market will return to pre-pandemic levels in terms of affordability at any point in the near future. Unfortunately, things have not gotten much better, as the median monthly P&I payment increased by 10.15% on a year-over-year basis, to $2,182 in the month of April. This jump in P&I payment represents a drastic month-over-month jump of 3.46%. This jump is actually quite perplexing, as median home sale prices have increased by 1.34% on a year-over-year basis, while mortgage rates have actually come down.

Mortgage rates remain stagnant in the mid-six percent range

For the past few months, mortgage rates have remained fairly stable, in the mid-six percent range. Although the stability that we’ve seen is a good thing, the levels they’ve stabilized at are quite a bit higher than recent historical averages. This, of course, is one of the leading causes of the affordability issues that we’ve seen recently.

It is worth noting, though, that we might see some discounted rates toward the back half of the year. Although the Fed has not touched the federal funds rate in nearly a year, the Fed chairman has signaled that one to two rate cuts are expected by the end of the year, so long as there aren’t any further spikes in inflation.

Inventories are building at an incredibly rapid rate

What we have been seeing in terms of inventories in California has been echoed on a nationwide scale. Fewer homes are being sold, with 1.95% fewer existing home sales when compared to this time last year. At the same time, 9.95% more new listings have hit the market on a year-over-year basis. This has led overall inventory to increase by a whopping 20.31% on a year-over-year basis.

As inventories are piling up, negotiating power will slowly shift from the sellers to the buyers, as buyers have more opportunities, and don’t need to move nearly as quickly as they had to just a year earlier.

Global economic and geopolitical instability are making both buyers and sellers more cautious

In any market, but especially the real estate market, instability is incredibly detrimental. Given the recent rise in uncertainty around tariffs and employment, coupled with continued instability in Europe and the Middle East, both buyers and sellers have become much more cautious. Inventories are growing throughout California and the broader United States. However, for those who have the capital and a long time horizon, times like these can represent excellent buying opportunities, as good deals are easier to come by.

However, it’s important to note that this is just what we have been seeing at the national level. California markets have largely remained resilient, which we’ll delve into more in the local lowdown section below.

Big Story Data

Line chart showing existing home sales fluctuating between 3.8M and 4.3M units from May 2024 to May 2025, while inventory generally increased from 1.35M to 1.55M units over the same period.

Line chart depicting Federal Reserve's mortgage-backed securities holdings from 2009 to 2025, rising from near zero to a peak of over $2.5M in early 2022, then declining to just above $2.0M by 2025.

Bar chart displaying median monthly principal and interest payments from Apr 2024 to Apr 2025, ranging from $1,981 to $2,204, peaking in Jul 2024 and Apr 2025.

Bar and line chart showing median sales prices fluctuating between $393,400 and $426,900, and 30-year mortgage rates ranging from approximately 6.00% to 7.20%, from May 2024 to May 2025.

Line chart illustrating monthly new home listings in the United States over seven years (Jun 2018 - Jun 2025), showing a strong seasonal pattern with peaks in spring/summer, and a recent sharp increase from Dec 2024.

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