Home Prices Reach Record Highs

June experienced significant turmoil, characterized by ongoing tariff wars and geopolitical tensions. Inflation and home prices increased, indicating that a housing market rebound is unlikely in 2025. Spring is usually the busiest season for home sales, yet sales dropped to a 10-month low, driven by higher home prices and mortgage rates around 6.5%. While this rate isn’t historically extreme compared to the 30-year average of about 6.8%, it remains restrictive in today’s high-price environment. The national median home price rose to $435,300, a 2% increase from a year earlier, although states like Florida and Texas saw prices decline due to an oversupply of new development. Despite these regional shifts, the national housing supply remains below pre-pandemic levels, maintaining upward pressure on prices.

The real estate industry was hoping for a rebound in 2025, but sales have been slow for the third consecutive year. This sluggish spring casts doubt on a late-year rebound, especially without evidence of falling rates. While President Trump has publicly criticized Fed Chair Powell for high mortgage costs, the connection isn’t direct. Mortgage rates are more closely tied to long-term government bond yields than short-term Fed policy.

Lately, those yields have been climbing.. Heightened uncertainty stemming from the ongoing trade war and economic instability has pushed investors to demand higher returns on the 10-year U.S. Treasury bonds, which are seen as a benchmark for mortgage rates. Low demand for long-term bonds has also boosted their yields. As yields rise, so do mortgage rates, making home borrowing even more expensive. Until trade tensions ease and investor confidence stabilizes, these elevated borrowing costs may continue to weigh on the housing market and delay recovery.