July 28, 2025 – The U.S. and European Union (EU) have reached a major trade agreement, avoiding a potential tariff war. While this brings some economic clarity, the housing market continues to face challenges—though there are a few bright spots.
Key Takeaways from the U.S.-EU Trade Deal
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The EU agreed to a 15% tariff on most exports to the U.S., while American goods entering the EU will face no tariffs.
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The EU will invest $600 billion in the U.S. and buy $750 billion in American energy by 2028.
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The deal prevents a trade war but may raise U.S. consumer prices by 1.8% in the short term.
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U.S. GDP growth could slow by -0.5% in 2025 and 2026 due to higher tariffs.
Mixed Signals in the Housing Market
1. New Home Sales Edge Up, But Regional Differences Remain
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Sales rose 0.6% in June after a steep drop in May.
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Midwest (+6.3%) and South (+5.1%) saw gains, but the Northeast (-27.6%) and West (-8.4%) declined.
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High mortgage rates and economic uncertainty may keep buyers cautious in July.
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Inventory is rising, with 9.8 months of supply—the highest since 2007.
2. Builder Confidence Improves Slightly, But Price Cuts Hit 3-Year High
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The Homebuilder Confidence Index rose 1 point to 33 (still below the neutral 50 mark).
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38% of builders cut prices—the highest rate since 2022.
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Future sales expectations improved slightly, but buyer demand remains weak.
3. Foreign Investment in U.S. Real Estate Rebounds
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Foreign buyers purchased $56 billion worth of U.S. homes (April 2024–March 2025), up 33% from last year.
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China, Canada, and Mexico were the top buyers, with Florida as the most popular destination.
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Despite the rebound, foreign transactions are still near historic lows.
Labor Market Holds Steady, But Rehiring Lags
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Jobless claims fell to a 3-month low, but continuing claims remain near 3.5-year highs.
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Layoffs are low, but companies are hiring more slowly, signaling caution.
What’s Next?
The trade deal brings stability, but higher tariffs could slow economic growth. Meanwhile, the housing market remains uneven—with rising inventory, hesitant buyers, and cautious builders. Foreign investment is rebounding, but global economic uncertainty lingers.
For now, all eyes remain on mortgage rates, job trends, and consumer spending to gauge where the market is headed in late 2025.
Would you like more insights on how these trends could impact your real estate decisions? Let us know! To schedule a meeting, email us at [email protected]
For more insights and expert analysis on real estate trends, visit the California Association of REALTORS® (C.A.R.) at www.car.org.
