Real Estate Market Update: June 2025

This month’s housing market shows a familiar push-pull: demand is still there, but high mortgage rates continue to hold back both buyers and sellers. 

While national and local trends point to slight shifts in pricing, inventory, and affordability, the real change may come later this year if interest rates finally ease. Here’s a breakdown of where things stand in June 2025, plus what it means if you’re thinking about making a move in the D.C. area.

June Housing Market Trends

Home sales are sluggish this month. But if mortgage rates just ease a little bit, we could see more activity.

Existing Homes

In May, existing home sales increased by 0.8% but decreased by 0.7% year-over-year, according to the National Association of Realtors (NAR). The median existing home price increased by 1.3% to $422,800, which is a record high for May and the 23rd consecutive month of yearly price gains.

According to NAR chief economist Lawrence Yun, the subdued sales are largely due to stubbornly high mortgage rates. Lower mortgage rates could help attract more buyers and sellers to the housing market, increase mobility of the workforce, and drive economic growth.

New Construction Homes

Despite 37% of home builders reporting that they have cut prices and offered incentives, mortgage rates have also pushed more new home buyers to the sidelines.

Sales of newly built single-family homes dropped by 13.7% in May and 3.2% over the past year, according to the National Association of Home Builders (NAHB). This was the slowest pace since October 2024. The median new home price in May was $426,600, higher than $414,300 a year ago.

Housing Inventory

Thanks to higher mortgage rates and slower housing market activity, inventory levels are increasing.

Total existing housing inventory was up 6.2% from April and 20.3% from May 2024, NAR reported. The existing home inventory currently stands at a 4.6-month supply, up from 4.4 months in April and 3.8 months in the same period last year.

New home inventory also continues to rise. According to NAHB, there was a 9.8-month supply in May at the current building pace. Builders will also pull back on construction in the months ahead to balance supply.

Mortgage Rates

Although prospective buyers prefer lower mortgage rates, Freddie Mac pointed out that buyers should find comfort in the stability of the rates, which have fluctuated within a narrow 15-basis-point range since mid-April.

As of June 26, the average interest rate of a 30-year fixed-rate mortgage was 6.77%, according to Freddie Mac’s Primary Mortgage Market Survey. This is lower than the 6.82% monthly average.

DC Housing Market Update

The Northern Virginia and D.C. housing markets continued to show resilience in May. 

According to the Northern Virginia Association of Realtors (NVAR), the local market is in a balanced yet still competitive phase, particularly in terms of pricing and pace, although there are some signs of cooling alongside its strengths.

Closed sales in Northern Virginia dropped 4.2% compared to the same month last year. NVAR noted that both local and national markets are responding to affordability challenges and rising interest rates.

The median sold price increased by 3.9% to $789,500, and homes in Northern Virginia sold on average in 15 days. This is nearly two weeks faster than the national average of 27 days! However, inventory remains much tighter at around 1.96 months of supply despite the 50% year-over-year rise in active listings.

Sellers are confident, and more buyers are entering the market after holding off during interest rate volatility. Strong demand is taking up any new supply, which has kept the market competitive, according to NVAR.

Homeowners Are 43 Times Richer Than Renters

Homeownership is still one of the most reliable ways to build wealth, according to Realtor.com.

The typical U.S. homeowner has a net worth of $430,000, based on data from the Federal Reserve Survey of Consumer Finance. On the other hand, the average renter's net worth is just $10,000.

Rapid price appreciation over the last five years has undoubtedly helped. Yun pointed out that property owners have seen their wealth grow by an estimated 45% since 2019. This is compared to just 36% for renters.

This has also given homeowners the chance to cash in on their equity and upgrade their home, while renters have not been given the same advantage.

While economic uncertainty still works against homebuyers, Yun forecasts a 6% increase in existing home sales for 2025 and an 11% increase for 2026. Paired with pent-up demand and anticipated Federal Reserve rate cuts this fall, this could provide prospective buyers with the help they need to jump into the market.

Is Now the Right Time to Buy/Sell?

Both buyers and sellers face challenges, but it doesn’t mean it’s a bad time to enter the housing market.

Buyers

Although buyer hesitation is at a three-year high, they could see improvements in terms of affordability and selection.

Not only does Fannie Mae predict mortgage rates to drop to 6.1% by year-end, but Redfin also says the housing bubble could deflate this year, although slowly. Home prices are expected to decline by 1% by the end of the year as more sellers enter the market. 

What it means for buyers: We’re moving more toward a buyer’s market! This means lower list prices and buyers have more room to negotiate prices down. Nearly half of sellers are giving concessions, just below the highest level on record. Wages are also expected to increase by around 4% as home prices decline, which will improve home buying affordability.

Sellers

Sellers are facing more competition thanks to higher levels of inventory.

According to Realtor.com, 19.1% of homes for sale in May had price cuts – the highest level since 2016. The total number of homes for sale also jumped by 31.5% compared to last year. Nationally, homes are also taking longer to sell, with some markets seeing two weeks or more of extra time on the market compared to pre-pandemic levels.

What it means for sellers: Sellers still have the upper hand in most areas, but they’re not calling all the shots like they used to. Sellers may need to adjust their expectations, particularly in markets with rising inventory levels. 

Final Thoughts

Whether you’re buying or selling, today’s market takes strategy and timing.

While sellers are adjusting to more competition, buyers are seeing better negotiating power and more options than they’ve had in recent years. The market is changing, but opportunities are still out there!

Looking to buy or sell in the DC area? Don’t navigate the complexities of the current housing market alone! Reach out today for expert real estate leadership.