Real Estate Market Update: July 2025

The housing market continues to shift, and this summer’s numbers reflect a mix of steady progress and persistent challenges.

At the same time, national headlines, like potential tax changes and rising construction costs, are adding new layers to the conversation.

Want the latest housing market news? Here’s your July 2025 real estate market update.

July Housing Market Trends

Home sales are down, but the nationwide housing supply continues to improve.

Existing Homes

June experienced a 2.7% decrease in existing-home sales, according to the National Association of Realtors (NAR). It’s a great time for homeowners, who saw their wealth expand by $140,900 over the past five years, but it’s been a challenging time for would-be buyers.

High mortgage rates, lower inventory, and a median existing home price of $435,300—a 2% increase from last year and a record high for June—have pushed buyers to the sidelines.

NAR pointed out that if the average mortgage rate declines to 6%, we would see an additional 160,000 renters becoming first-time homeowners and increased sales activity from existing homeowners.

New Construction Homes

New home sales were relatively flat, rising by only 0.6% in June, according to the National Association of Home Builders (NAHB). The NAHB noted the persistent weakness in the housing market despite seasonal expectations for growth.

Elevated mortgage rates and price levels have limited buyers’ purchasing power, despite targeted incentives and pricing adjustments by builders. The median new home sale price dropped by 4.9% in June to $401,800. This is also down by 2.9% from a year ago.

Housing Inventory

Total existing housing inventory was down 0.6% in May, although it saw a steep increase of 15.9% from June 2024, NAR reported. There’s currently a 4.7-month supply of unsold inventory at the current sales pace.

New home inventory is definitely doing better. According to NAHB, inventory is 1.2% higher than the previous month and 8.5% higher than a year ago. At the current sales space, the new home supply is 9.8 months compared to 8.4 last year. Completed, ready-to-occupy inventory is up 21.3% from last year.

Mortgage Rates

The 30-year fixed-rate mortgage has largely remained unchanged over the past month, sitting at 6.74% as of July 24, 2025, based on Freddie Mac’s Primary Mortgage Market Survey.

Freddie Mac noted that as long as the economy remains strong and employment and incomes continue to grow, the housing market outlook remains positive.

DC Housing Market Update

The Northern Virginia and D.C. housing markets saw a wave of new listings hit the market in June.

The number of homes sold in June rose by 13.6% compared to June 2024, thanks to increased inventory, the Northern Virginia Association of Realtors (NVAR) reported. Active listings also increased by 52.7% year-over-year, pushing the months of supply to 1.84, a 46.5% increase compared to last year.

The median sold price in the NVAR region decreased by 1.3% year-over-year to $770,000, and homes stayed on the market for an average of 20 days. NVAR noted that these trends point to a market that is normalizing, giving buyers more flexibility while encouraging sellers to align with changing conditions.

The biggest difference this year, NVAR pointed out, is options. Buyers have more time to make informed decisions, and prices have stabilized. Competition remains fierce in the most sought-after markets, with well-priced homes receiving multiple offers.

Goodbye to Capital Gains Taxes?

President Trump announced that he’s considering legislation that would eliminate capital gains taxes on primary residences, HousingWire reported. If this were to happen, homeowners could potentially see BIG savings, especially those sitting on long-term equity.

Currently, sellers may owe capital gains taxes if their profit exceeds $250,000 (or $500,000 for married couples) on a primary residence. Removing this tax entirely would let sellers keep more of their profit to put toward their next home or invest elsewhere.

This could also motivate more homeowners to list their properties, particularly those who’ve stayed put to avoid a big tax hit. In high appreciation markets, where gains often exceed the current exclusion limits, this could help unlock some much-needed inventory.

According to the NAR, over eight million homeowners exceed the $500,000 cap.

Trump said it’s a consideration; however, he added that “if the Fed would lower the rates, we wouldn’t have to do that.”

What Shrinking Federal Jobs and Tariffs Could Mean for Homebuyers

The DMV’s federal government workforce shrank by about 22,100, reports show, with agencies cutting staff or relocating positions out of the region. 

While this has sparked speculation about a mass exodus and market disruption, the actual impact appears more localized and gradual.

However, surveys of local agents reveal that about 40% have worked with clients whose housing decisions were tied to federal job changes. 

Still, with federal workers making up just 9% of the region’s total workforce, the broader market remains relatively stable.

At the same time, tariffs on imported materials like lumber, steel, drywall, and copper are driving up construction costs, NBC News reported.

Estimates suggest new tariffs could add between $4,000 and $10,900 to the price of building a single-family home. Even if existing home prices soften locally, the cost to build, and eventually buy, new homes is likely to rise.

Final Thoughts

Inventory is improving, builders are adjusting, and buyers are regaining a bit of breathing room. But higher mortgage rates and broader economic policy changes (from tariffs to tax talk) continue to influence affordability and long-term planning.

If you plan to make a move this year, the best time to buy or sell depends on your personal situation. There’s not much we can do to change the housing market, but we can look closely at what’s happening right now and plan around it. Prices, rates, and inventory will continue to shift, but your timing should come down to what works for you.

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.