Mary’s Market Watch - Q2 2025

WOW! There is so much going on in the news and the market. 

Every. Single. Day.

Record-high home prices. Declining home sales. Increased inventory (meaning more properties on the market). High mortgage rates (meaning you pay more for less house). Seller’s market. Buyer’s market.

How do you sort all of this? What do these markers mean for you as a home seller / buyer or investor?

Take a deep breath and remember that, historically, real estate is a very sound investment. In fact, some consider real estate a sounder investment than the stock market, plus the real estate market typically tracks with inflation (AND can be an effective hedge against inflation). 

All of this means during times of high inflation, as we are experiencing now and which is forecasted to continue, real estate is a smart asset to have. Full stop.

The Broad Strokes

Nationally, home prices have reached an all-time high with a median existing-home price of $435,300. This is in spite of high mortgage rates, limited inventory and declining sales and makes sense given the current state of inflation. Home buying is also leaning more in the favor of buyers; in fact, it is almost a balanced marketbetween buyers and sellers. If the Federal Reserve Bank cuts the interest rates later this year, as it is forecasted to do, this should buoy sales.

Locally, DFW is still on target to be the hottest real estate market in 2025 thanks to population growth and investment dollars in the area. 

Additionally,

• Amidst slower sales, DFW has seen increased inventory and strong demand. Home prices are forecasted to see modest gains.

• The luxury market is in high demand, while more affordable housing options are typically found in the booming DFW suburbs.

• The housing market continues to become more favorable to buyers who now have more options and negotiating power than before.

• The fundamentals for the rental market are strong and includes forecasted rent growth.

  
  

In Other News

The owners of Airbnb, Vrbo and other short-term rental companies just received good news. The Fifth District Court of Appeals in Dallas recently upheld a lower court’s decision to block banning short-term rentals in single-family neighborhoods in the City of Dallas.

Originally, the Dallas City Council changed zoning rules in June 2023, which banned short-term rentals in single-family neighborhoods as well as initiated a series of mandates and required adherence to occupancy and noise limits for short-term rentals. 

With Dallas hosting the FIFA World Cup in June 2026, this turnabout bodes particularly well for short-term rental property owners. (Source: Bailey, Jr., Everton, “Appeals court weighs in, again, on whether Dallas can restrict Airbnb, Vrbo rentals,” Dallas Morning News, July 23, 2025.)

Fun Fact For Pet Lovers

Did you know that there are more American households with pets than children? 

As of 2023, approximately 70% of American households own a pet, which is up from 56% in 1988, whereas households with children under 18 are now at a record low. Over a 20-year period, the percentage of families with children under 18 in their households declined by 8% from 48% in 2002 to 40% in 2022 due to declining birth rates and the fact that a good number of baby-boomer households have seen their children leave the nest.

This demographic change is naturally affecting our home buying choices: since the pandemic, more than 20% of homebuyers consider their pet when choosing a neighborhood. (Source: Lautz, Jessica, “A Stunning Stat: There Are More American Households With Pets Than Children,” National Association of Realtors Economists' Outlook, March 13, 2023.)

A Deep Dive into the Data

U.S. Real Estate Market

The U.S. economy has started to moderate after taking a downturn in 2022 and 2023. Reaching an all-time high median price of $435,300, U.S. homes keep ticking up in value even though sales are declining. The undersupply is the driver of the price increases. If interest rates, which in turn, affect mortgage rates, decline during the second half of 2025, this should boost home sales along with income growth, healthy inventory and low unemployment.

• Mortgage Rate.  As of July 30, 2025, the rate for a 30-year fixed mortgage is 6.75%, which is down from 6.81% on April 29, 2025. Yesterday, Federal Reserve Chairman Jerome Powell announced there would be no interest rate cuts at this time, an announcement that was largely expected. (Source: Graham, Matthew, “Markets Expected More Dovishness From Powell,” Mortgage News Daily, June 30, 2025.)

• Home Sales, Price and Inventory. Sales of existing homes decreased by 2.7% in June, while the number of homes on the market increased by 15.9% year-over-year. The average months’ supply is 4.7, up from 4.0 in June 2024. A balanced market has 6.0 months of inventory. The median sales price increased by 2.0% to $435,300 from June 2024. (Source: “NAR Existing-Home Sales Report Shows 2.7% Decrease in June,” National Association of Realtors, July 23, 2025.)

  
  

The Texas Economy

In Texas, the median home price of $347,000 is roughly 25% less than the national median home price of $435,300, underscoring the relative affordability of Texas. However, housing affordability continues to be an issue everywhere. Of course, Texas property taxes are higher than they are in other states (but then again,we don’t have state income tax!). In effect, high property taxes create a barrier to entry for certain homebuyersin Texas.

• Median Home Price. At $347,000, the new median home price in Texas slightly increased by 0.6% from June 2024 to June 2025.

• Active Listings. This figure increased by an astounding 27.8% to 156,725 in June 2025 year-over-year. 

• Closed Sales. There were 32,180 closed sales in June 2025 up by 7.8% year-over-year.

• Inventory. Months of inventory is 5.7 in June 2025, up from 4.5 months in June 2024. As a reminder, a balanced market between buyers and sellers is 6.0 months, so we are about to strike a balanced market statewide.

• Days on Market. The average sale in June took 93 days on market, which is 6 days longer than in June 2024. (Source: Metrotex in conjunction with the Texas A&M Real Estate Research Center, “June 2025 Texas Housing Report,” Metrotex, July 2025.)

  
  

DFW Residential Real Estate Sales

With a robust increase in inventory, DFW real estate is experiencing modest price growth albeit at a slower rate than in past years. Homes are staying on the market longer, and the market is definitely improving for buyers.

• Median Home Price. With a median home price of $405,000, DFW saw a modest increase of 0.3% from June 2024 to June 2025.

• Active Listings. This figure increased by an astounding 32.8.8% to 36,842 in June 2025 year-over-year. This well exceeds the pre-pandemic high of 26,990 in July 2019. 

• Closed Sales. There were 8,910 closed sales in June 2025, which represents an increase of 8.2% year-over-year.

• Inventory. Months of inventory is 4.8 in June 2025, up from 3.8 months in June 2024. As a reminder, a balanced market between buyers and sellers is 6.0 months.

• Days on Market. June sales averaged 84 days on market, which is 8 days longer than June 2024. (Source: Metrotex in conjunction with the Texas A&M Real Estate Research Center, “June 2025 DFW Housing Report,” Metrotex, July 2025.)

  
  

Commercial and Multifamily Market

The outlook for the commercial real estate market is mostly upbeat despite some volatility with a few sectors performing better than others. 

Specifically, retail remains steady, while the multifamily and industrial sectors are strong with robust demand. Both sectors are starting to slow down a bit as the inventory in the new-construction pipeline is diminishing. Many multifamily markets are experiencing high renter demand, increased occupancy and modest rent growth. The industrial sector is becoming more balanced, as the multifamily sector is settling into a more normalized cycle.

The office space market continues to be a laggard with vacancy rates approximating an average 20%, but office values are starting to stabilize. The oversupply of office space, rise of remote and hybrid work and economic uncertainty account for this poor performance. (Source: “2025 commercial real estate midyear outlook,”JP Morgan Chase, July 14, 2025.)

To combat this, a trend to convert office space to apartments has emerged and recently reached record highs. The good news is that the glut of office buildings is finally shrinking and is on pace to contract for the first time in 25 years, according to CBRE Group, a commercial real estate services and investment firm. The glut originally stemmed from a multiple-year construction spree in the office sector made possible with affordable loans and tax breaks from cities followed by the surge in remote work during the pandemic. 

While office-to-apartment conversions can be costly and full of structural obstacles, developers are now taking advantage of plummeting prices of office buildings, changes to zoning codes and government incentives to offset the oversupply. If all goes well, this should increase the occupancy rate and buoy this sector overall. (Source: Grant, Peter, “Developers Are Finally Dealing With the Office-Oversupply Problem,” Wall Street Journal, June 17, 2025.)

Interestingly, top-tier office spaces have become the new darling, especially in Dallas. Walkability and the younger generation have contributed to the boom in the Uptown commercial market, and now Dallas is recording its first office market uptick in five years. (Source: Ghalioum, Ramzi Abou, “Dallas records its first office market uptick in five years thanks to Uptown boom,” Dallas Morning News, July 21, 2025.)

New-Home Construction 

U.S. new-home construction is facing a mixed outlook. Some areas of the country are booming, while others are slowing down. In general, new-home starts are not taking place at the clip they once did due to rising costs and economic uncertainty.

Areas with population growth and a strong economy naturally host most of these new-home starts. According to Zonda’s Builder publication, DFW remains the national leader in new-home construction due to strong economic and population growth in our business-friendly environment (Source: Rosas, Leonardo, “DFW reigns supreme among hottest new home markets in US,” Dallas Business Journal, June 24, 2025.)

Food for Thought

The history of real estate dates back to ancient land ownership concepts when our ancestors abandoned the hunter-gatherer lifestyle for a more agrarian society between 30,000 BC and 15,000 BC. The term real estate emerged much later during Early Modern English in the 1660s when the two words real (from the Latin word realis meaning existing or genuine) and estate (from the Old French word estat meaning status or condition) were combined to describe a fixed asset or land, including all structures thereupon. While real estate is a sound investment and an important asset, it is much more: real estate provides shelter and security for families and individuals, allowing people to establish roots in a community and create a sense of place that is intrinsic to the core of who we are. After all, home is where the heart is.