Summer 2025: Why Home Sales Are Slow While Wall Street Eyes September Rate Cuts

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News Flash

Wall Street Predicting Rate Reductions

Major financial players just shifted gears. Barclays, BNP Paribas, and Deutsche Bank have all pivoted their forecasts toward a 25-basis-point Fed rate cut as soon as September 2025. Why the sudden change? Jerome Powell's recent Jackson Hole speech threw cold water on their previous timeline expectations.

Until Powell spoke up about emerging labor market risks, these same brokerages expected rate cuts to happen much later — think late 2025 or even 2026. But when the Fed Chair starts talking about labor market constraints affecting inflation dynamics, Wall Street listens.

The shift is significant. These institutions now anticipate the Fed will cut rates a quarter-point this September instead of waiting for a more gradual easing cycle. Powell's emphasis on labor market signals as "increasingly pivotal" in Fed decision-making clearly resonated.

Markets responded immediately. Bond yields adjusted, equity markets rebalanced risk positions, and analysts started eyeing sectors sensitive to borrowing costs — including real estate.

This accelerated timeline could provide fresh stimulus to property markets and business investment. But it also highlights how quickly Fed commentary can flip institutional strategies and market sentiment.

Housing Market Hits the Brakes: Slowest Summer Pace in a Decade

Summer 2025 isn't delivering the typical housing market heat.

The numbers paint a clear picture of deceleration. Homes now take an average of 43 days to go under contract, up from 35 days in July 2024. Pending home sales dropped 1% month-over-month to their lowest level since November 2023.

But here's the real kicker: contract cancellations surged to approximately 58,000 in July. That's a dramatic jump signaling serious buyer uncertainty and market volatility.

High mortgage rates, elevated home prices, and broader economic uncertainty are keeping both buyers and sellers on the sidelines. Some sellers are simply delisting properties or refusing to list altogether, worried about homes sitting unsold or selling below asking price.

Regional differences tell an interesting story:

• South and West markets face notable price corrections due to increased inventory

• Midwest and Northeast regions remain competitive with limited supply

• Tampa shows heightened seller motivation with longer listing times and more price reductions

Despite the cooling, median home sales prices still edged up 1.4% year-over-year to $434,189. Affordability remains brutal in major metros — Los Angeles had just 3% of listings considered affordable.

The buyer's journey is getting longer and riskier. Deal fall-through rates are climbing as both sides adjust expectations amid ongoing economic pressures.

Sources: [Source], [Source], [Source], [Source]

More You Should Know

• Mortgage Rates Continue Falling: Mortgage rates experienced a further decline in late August 2025, with 30-year fixed rates dropping to 6.543%, as market expectations grew for Federal Reserve rate cuts in September. [Source]

• Stalled Housing Market Frustrates All: Despite 21 consecutive months of rising inventory, the U.S. housing market remains stalled, leading to widespread frustration among buyers, sellers, and builders who are grappling with high prices, elevated mortgage rates, and homes sitting longer on the market. [Source]

• New Home Prices Dip Below Existing: In an unusual market shift, the median price of new homes fell below existing home prices in July 2025, driven by homebuilders' aggressive pricing and incentives to attract buyers in a challenging market. [Source]

• CRE Sees Mixed Q2: The U.S. commercial real estate market experienced varied Q2 2025 performance, with multifamily maintaining strength, industrial sectors slowing, and persistent regional disparities impacting investment and pricing. [Source]

• Housing Construction Stays Strong: Despite a slight dip in overall building permits for July 2025, robust single-family home authorizations and a significant increase in housing starts demonstrate continued resilience in new construction activity. [Source]

• New Home Sales Rise: U.S. new home sales increased for the second consecutive month in August 2025, reaching an annual rate of 685,000 units, indicating early signs of resilience in the housing market. [Source]

• Office Vacancy Hits 19.4%: The national office vacancy rate climbed to nearly 19.4% in July 2025, with cities like Austin and Seattle experiencing significant increases, despite a concurrent rise in average asking rates. [Source]

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