U.S. Real Estate & Market Pulse – Key Trends Shaping Housing, CRE, and Economic Sentiment

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!

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Average going rates as of Jul 31 2025

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🏛️ Economic & Market Sentiment

• Consumer Confidence Edges Higher – University of Michigan index rose to 61.8 in July, but remains 16% below December 2024 levels. Short-term inflation expectations ticked up to 4.4%. ➡ Full Report

• Job Optimism at 4-Year Low – The Conference Board’s confidence index dipped to 97.2 in July, with job market optimism hitting the lowest since March 2021. Inflation expectations eased to 5.8%. ➡ Read More

• Housing Market Signals GDP Headwinds – Moody’s warns that 7% mortgage rates are slowing activity and weighing on economic growth. ➡ Analysis

• Federal Reserve Holds Rates Steady – The Fed kept rates at 4.25–4.50%, with policymakers split on when to begin easing. ➡ Policy Update

• Housing Market Weakens Further – Pending home sales fell to a 13-year low; consumer debt delinquencies are climbing. ➡ Full Story

• Builders Pull Back – Single-family housing starts dropped 4.6% in June; builder sentiment slid to an 11-month low. ➡ Details

🎢 Impact on Real Estate

Existing-Home Sales Fall Despite Record Prices

• Sales down 2.7% MoM in June, hitting a 3.93M seasonally adjusted annual rate, the lowest since September 2024 AP News

• The median existing-home price climbed to $435,300, marking a 24th consecutive YoY increase AP News

• Inventory rose about 16% YoY, yet first-time buyers fell to 30% of all purchases, while nearly 21% of listings received price cuts AP News

Pending Home Sales Slip Despite Inventory Build-Up

• The Pending Home Sales Index dipped 0.8% in June compared to May, off 2.8% YoY, indicating softening contract activity Wall Street Journal

• Declines occurred across the Midwest, South, and West, with only the Northeast showing a modest 2.1% increase in pending deals Houston Agent Magazine

• NAR economists suggest the decline continued even as market inventory expands, underscoring affordability challenges Houston Agent Magazine

🎙️ RE Spotlight

Mortgage Rates Ease Slightly but Remain Elevated

• The 30-year fixed mortgage rate eased to 6.72%, down marginally from 6.74%—providing limited relief to buyers AP News

• Despite the small drop, experts warn rates are likely to hover above 6% through year-end, delaying affordability improvements AP News

• Homeownership remains at around 65%, unchanged from 2019, as economic uncertainty stifles refinancing and new purchase activity AP News

Condo Market Weakens as Buyers Push for Value

• U.S. condominium prices fell 1.4%, the steepest drop in over a decade, while single-family prices still reached record highs Wall Street Journal

• Rising supply levels near decade-highs combined with high HOA fees and insurance costs have drained demand, especially in disaster-prone states like Florida Wall Street Journal

• Condo buyers are exercising leverage—more listings and greater buyer selectivity are forcing softened pricing and seller concessions Wall Street Journal

Foreign Buyer Activity Edges Up—High-End Segment Leading

• Foreign purchases rose 44% YoY in the first half of 2025—from 54,300 to 78,100 homes—driven by currency trends and global capital flows investopedia.com.

• These buyers paid an average of $490,000, well above the U.S. median home price (~$410,000), boosting luxury demand investopedia.com.

• The majority of foreign buyers use all-cash offers, frequently acquiring second properties and influencing high-end markets investopedia.com.

🏰 RE State Zone

Santa Fe Becomes a Rising Star for Luxury Second Homes

• Santa Fe is now ranked #2 on the Wall Street Journal/Realtor.com luxury housing index—drawing wealthy buyers from California, Texas, and Arizona New York Post

• With a median luxury home listing price around $2.7 million, the market combines cultural richness, lifestyle, and relative affordability New York Post

• About 9.2% of all homes in Santa Fe are vacation or second homes, significantly above the national average SFGATE

California Investor Ownership Spikes

• Nearly 19% of homes in California are now investor-owned, with rural counties like Sierra reporting investor stakes as high as 82% The Guardian

• Nationally, investors now own about 27% of single-family homes, with small-scale landlords (1–5 units) forming the majority AP News

• The rise of investor ownership in high-cost states further tightens supply and puts pressure on affordability for traditional buyers AP News

🏕️ Niche-RE

Investor Flipping Slows with Squeezed Profit Margins

• 67,394 single-family homes and condos flipped in Q1 2025, the fewest since 2018, making up 8.3% of all sales.

• Typical gross profit declined to $65,000, equating to a 25% ROI before expenses, down from 28% in Q4 2024 worldpropertyjournal.com

• Only about 26% of metro regions offered flipping returns above 50%, with most profit growth slowing in larger metros themortgagepoint.com

Investors Continue to Dominate Sales as Buyers Retreat

• Investors purchased approximately 30% of all single-family homes in Q1 2025, the highest share in 14 years Wall Street Journal

• Small investors (owning fewer than 100 properties) now account for around 25% of all home purchases—far outpacing institutional firms Wall Street Journal

• In contrast, institutional players like Invitation Homes and Amherst pivoted to selling homes rather than acquiring, signaling a shift in capital strategy CRE Daily

Vacation Home Demand Collapses, Creating Buying Opportunities

• Mortgages for second homes sank to 2.6% of total originations in 2024, hitting the lowest level on record, as demand waned amid inflation and rate shocks Redfin

• Despite higher prices, the median value of second homes reached $495,000, compared to $385,000 for primary residences Redfin

• Analysts call this downturn a rare buyer’s market in vacation property, incentivizing value-minded purchasers to act reedyandcompany.com.

🖼️ Chart-Tastic

🌍 Dwelling of the Day

And…that's a wrap on this edition!

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