July 2025 Housing Market Update – National Slowdown, NJ Hotspots, and Wall Street Watch

Good morning, Dwellers! Welcome to another edition of Dwellings Digest, a realtor and investor driven newsletter simplifying real estate, exploring the economy-stock-real estate link, adding a fun twist with niche topics and more. Enjoy!

In today’s edition - 

• Housing Market Watch: U.S. home price growth slows to its weakest pace since 2021 as inventory builds.

• Investor Trends: Rising rental demand fuels investor re-entry into suburban markets.

• Mortgage Rate Shift: 30-year fixed mortgage rates dip below 6.7% for the first time in 8 weeks.

• New Jersey Spotlight: Bergen and Monmouth counties post double-digit YoY home price gains despite national slowdown.

• Stock Market Recap: Dow edges higher, tech stocks rebound, and real estate investment trusts (REITs) see mixed results.

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🏛️ Economic & Market Sentiment

First‑Time Buyers Shift Toward Older Homes

• Younger buyers face steep prices Homebuilder pressures: While Lennar beat forecasts, warned margins remain under stress—indicating cautious investor sentiment..

• Instead, they’re Insurance risk squeeze: Reinsurer woes and higher rates feed cost pressures on homeowners—not REIT-linked yet but a financial drag..

• These prop Trade-war tariff impact: 25% auto and construction tariffs heading into effect; bond yields and mortgage costs may rise, dampening housing and mortgage-refi stocks..

High Prices & Mortgage rate dynamics

• Bond market volatility (10-year yield turbulence in April) affects mortgage rates—impacts housing demand and mortgage-REITs rising 16% YoY .

• The national median price reached $435,300, marking the 24th straight annual gain—a sign of persistent affordability challenges .

• First-time buyers accounted for just 30% of all purchases, down from the historical norm of ~40% .

🎢 Impact on Real Estate

• Homebuilder Stocks: Lennar-related shares under pressure as margin warnings weigh in, despite land banking benefits.

• REIT Sector: Apartment REITs and rental property stocks poised to gain value as multifamily absorption rebounds.

• Financials & Mortgage: Bank earnings sensitive to mortgage demand; rate commentary linked to Fed outlook.

• Consumer Staples & Retail: Retailers tied to housing demand, e.g., appliance and furnishing chains, may see volume variations.

• Construction Materials: Tariffs on foreign materials could raise costs; related stock values fluctuate in response.

• REIT M&A: Recent deals like Blackstone’s large multifamily acquisitions signal investor confidence in rentals businessinsider.com.

• Macro Signals: The Fed’s July meeting (no rate cut yet), inflation concerns, and trade policy shifts continue to influence real estate and equity markets businessinsider.com

🎙️ RE Spotlight

Borrowing Rates & Buyer Psychology

• Mortgage rates remain elevated at around 6.75–6.84%, deterring potential buyers and weighing on deHome insurance premiums increased 20% from 2022 to 2024, with another 8% rise projected in 2025.

• According to NAR, if rates drop to 6%, an additional 550,000 households could In high-risk regions, homeowners saw premiums jump from $7,000 to $12,000 within a year.

• Zillow projects homes to end 2025 with values **2%Insurance cost spikes are triggering localized mortgage delinquencies, threatening housing affordability.

New Construction Takes Precautionary Approach

• BuiU.S. listings rose 31.5% year-over-year in May, marking the 19th consecutive month of growth—to manage risk amid slowiThe typical home stayed on the market 51 days—about 6 days longer than last year.

• Lennar and others now option 74% of land, up from 36% in 2017, maintainiPrice cuts hit 21% of listings in the South and West, double the rate in the Northeast.

• With new home sales flat and inventory lingering, this strategy positions builders to ramp up quickly wheIn Manhattan, 69% of transactions were all-cash in Q2 2025.

Investor Activity Surge 18% year-over-year

• Investor Activity Surge Luxury sales (top 10%) are up 18% year-over-year, with median prices at $6.52 million in early 2025—Inventory in the luxury segment dropped 21%, highlighting strong demand among wealthy investors.

• Rather than large institutions, small-scale investors (owning <100 homes) account for nearly 25% of Multifamily REIT bounce: Tariffs will slow new construction, lifting value of existing rentals—Blackstone’s $10B acquisition is an example..

• These investors often refurbish properties (~$250K buys, renting for Apartment REITs setup: JPMorgan flags brokerages and net-lease REITs for near-term growth; expect residential REITs to shine in 2026.

🏰 RE State Zone

New Jersey Real Estate Snapshot (June – July 2025)

Market at a Glance - Key Metrics

• Median sale price in Jun ’25: $581,900 (+6.0% YoY) with 8,248 homes sold (+3.7%) and 31,871 active listings (+11.8%) .

• Top metros seeing fastest price growth: North Bergen (+78.9%), Fort Lee, Summit, Plainfield, Elizabeth among others mysanantonio.com

Regional Market Update

• Median price for single-family homes statewide rose 7.1% YoY, hitting $600K. Higher-end suburbs like Livingston saw strong gains, while Jersey City prices plateaued (~$694K) mysanantonio.com.

• State inventory barely budged (+0.2%), but Elizabeth spiked +130% YoY and Union County +15%; Jersey City homes now take longer to sell (≈39 days) mysanantonio.com.

• Affordability index declined from 78 to 74; condo prices in Union County jumped 11.8% ($427K) and in Livingston 38.7% ($877.5K)—pricing many entry buyers out businessinsider.com bankrate.com

🏕️ Niche-RE

Home Flipping Activity Contracts, Investor Margins Squeeze

• Flipping declined sharply: 67,394 homes flipped in Q1 2025—the lowest quarterly figure since 2018—with flips making up just 8.3% of all sales attomdata.com.

• Gross profit per flip dropped to $65,000, delivering a 25% ROI before expenses, down from 28% in Q4 2024 housingwire.com

• Daily margins are tightening especially in high-priced areas. Only 26% of metro markets saw ROI above 50%, mostly in the Midwest and Northeast prnewswire.com

Foreign Buyers Gain Bargain Power as Dollar Weakens

• A weaker U.S. dollar has made American real estate 5–10% cheaper in foreign currencies, spurring a 44% rise in international home purchases Apr ’24–Mar ’25 Investopedia

• Despite record-high median home prices nearing $447,000, foreign buyers now pay, on average, $494,400—benefiting from exchange rate shifts Investopedia

• Russia, Europe, and Japan-based buyers saw the most pronounced purchasing power gains in June redfin.com.

🖼️ Chart-Tastic

And…that's a wrap on this edition!

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