Home prices just posted their steepest annual decline since 2017

Happy 4th of July!

Since we won't see you tomorrow, we wanted to wish you and your family a very Happy Fourth of July. We hope you have the chance to relax, recharge, and enjoy the holiday.

To get into the spirit of things, if you haven’t seen it yet, watch the video of 75,000  fans singing “Country Roads” after the USA soccer team’s victory in San Francisco. It's become one of the signature moments of this year’s World Cup, and it's hard not to smile watching it. 

In fact, this year's tournament has been nothing short of heartwarming — so many fans from around the world discovering America for the first time, many of them falling in love with it along the way.

We understand that feeling firsthand. As Brits who came to this country years ago, we are truly grateful for all the opportunities this country has given us. 

Owning a home still remains a crucial part of the American Dream, and we consider helping people achieve that dream a privilege.

We truly wish you a Happy Fourth, and we’ll see you back here next week.

- James

Home prices had their biggest annual drop since 2017

In June, the national median list price fell 2.5% year over year to $430,000, the steepest annual decline since 2017, while pending home sales rose 3.7% from a year ago, marking a seventh straight month of gains. That’s according to Realtor.com’s latest housing update.

Here are the other key takeaways from the report:

• Prices are broadly weaker, not just shifting – Price per square foot also fell 2.1% year over year, confirming the drop isn't just a function of different types of homes coming onto the market — actual home values are cooling.

• Inventory keeps climbing, but slowly – Active listings rose 1.9% from a year ago (and 4.1% from May), though supply remains 11.3% below typical pre-pandemic (2017–2019) levels.

• Homes aren't taking longer to sell, for the first time in over two years – The typical home spent 53 days on the market, identical to a year ago, ending a 26-month streak in which homes had been sitting longer each year. Pending home sales rose 3.7% year over year, the seventh consecutive month of annual gains.

• Sellers are adjusting to reality – 18.8% of listings saw a price cut in June, down from a year ago, suggesting more sellers are pricing realistically from the start rather than cutting later.

• Buyers are sticking with their contracts – Contract cancellations held at 6.9% of pending sales, down from 7.3% a year ago, suggesting buyers are more confident as the market stabilizes.

My take

The market's unfreezing, not crashing — sellers are finally caving on 2022-peak prices and buyers are stepping back in, which is why prices, pending sales, and cancellations are all moving the "healthy" direction at once instead of the usual panic pattern. But I'd hold off calling it a turnaround: the national number hides a real split (West and South are actually correcting while the Northeast and Midwest keep climbing), and this trend is only a month old heading into the slowest season of the year — with Realtor.com's own economist already flagging softer signs right behind this report.

Mortgage rates post biggest drop in 2 months

The average rate on 30-year fixed mortgage fell to 6.43% for the week ending July 2, the biggest weekly decline in two months and down from 6.49% the week before. According to Freddie Mac, rates averaged 6.67% during the same period in 2025.

Here’s what else Realtor.com reports:

• 15-year rates also declined – The average 15-year fixed mortgage fell to 5.79% from 5.84% last week, improving affordability for buyers seeking shorter-term loans.

• The decline was driven by easing geopolitical tensions – Lower oil prices and a tentative U.S.-Iran peace agreement helped push Treasury yields—and mortgage rates—lower.

• Rates are at their lowest level in seven weeks – It's a modest improvement for buyers, though borrowing costs remain well above the ultra-low rates of just a few years ago.

• Affordability remains the biggest challenge – Even with this week's decline, mortgage rates are still above 6%, continuing to limit purchasing power for many would-be buyers.

My take

A rate drop is good news, but let's keep it in perspective — this is a step, not a turning point. With rates still above 6%, affordability pressure isn't going away, and plenty of buyers will stay parked on the sidelines regardless of a quarter-point move. Still, don't underestimate what a modest dip can do psychologically, especially for buyers who've been waiting for "a sign," this could be it. That makes now a smart moment to reach back out to clients who paused their search earlier this year, not with pressure, but with a reminder that conditions have shifted, even slightly, in their favor.

Build buyer demand before your listing even goes live

The pre-market window is becoming one of the most important phases of selling a home, and Zillow Preview gives agents a free way to tap into it. With Zillow Preview, your listings can appear on Zillow and Trulia before they hit the MLS, getting in front of an average of 235 million unique users a month. Buyers can discover, save, and share your listing early, and you get real-time data on views and saves to help guide pricing and marketing decisions before day one on the market. Over 1,000 brokers have already signed on, and the program is free and open to more. If your brokerage hasn't joined yet, this is absolutely worth bringing to their attention.

Markets projected to see a surge in home prices

Zillow just updated its 12-month home price forecast, and the national picture remains subdued. It expects U.S. home prices to slip 0.2% between May 2026 and May 2027, pointing to a housing market that's largely flat rather than booming

According to ResiClub, the Zillow Home Value Index is still up 0.8% year over year, and Zillow expects affordability to improve modestly over the next year as incomes grow faster than home prices.

Here are the 10 metros Zillow expects to post the strongest home price appreciation between May 2026 and May 2027:

1. Rockford, IL:  4.3% 

2. Syracuse, NY: 4.2% 

3. Utica, NY: 3.7% 

4. Atlantic City, NJ: 3.6% 

5. Rochester, NY: 3.4% 

6. Binghamton, NY: 3.3% 

7. Youngstown, OH: 3.0% 

8. Erie, PA: 2.9% 

9. Pottsville, PA: 2.9%

10. Knoxville, TN: 2.8%

My take

This forecast isn't really about a handful of markets suddenly taking off. It's more about the rest of the country catching up. Many of the metros Zillow expects to lead over the next year are affordable, supply-constrained places that never saw the kind of price explosion we got in markets like Austin, Phoenix, or Tampa during the pandemic. Now the gap is starting to narrow. Instead of focusing only on Zillow's top 10, I'd also keep an eye on the next tier of affordable markets. If this trend has legs, the winners won't be limited to just a few cities.

Schematics

The news that just missed the cuts

• Ranked: the best books for real estate agents

• What solo agents need to stay competitive

• How to win listings when AI says your price is wrong

• The biggest sign it’s time to switch brokerages 

• LA’s Skid Row to change forever as $2B mega project brings 1,500 new homes

Foundation Plans

Advice from James to win the day

The brokerage you join significantly impacts your pay, access to technology, and career development. It’s important to choose wisely. Today we begin our primer on the essentials that every agent needs to know when considering a brokerage:

What is a real estate brokerage, and what do brokers do? – A licensed real estate brokerage is a legal entity, such as a sole proprietorship, partnership, LLC, or corporation that employs a licensed real estate broker. The broker, or broker-owner, acts as the principal who oversees, directs, and is responsible for all licensed activities and real estate services of the brokerage. Until they get their broker’s license, every agent has to work underneath the auspices of a broker of record. Many agents never get a broker’s license. They simply remain agents and work underneath a broker for their entire careers.

What are the different types of residential brokerages? – Typically, brokerages fall into four categories:

• Independent, not affiliated or franchised (e.g., Baird & Warner)

• Independent franchised companies (e.g., Howard Hanna)

• A national or regional organization or its subsidiaries, franchised (e.g., BHHS)

• A national or regional organization or its subsidiaries, not franchised (e.g., eXp)

Remember: Just because brokerages fall into the same category doesn't mean they'll be similar. Here are some important differences to consider when evaluating brokerages: 

• Commission structure — traditional vs. discount brokerages 

• Virtual or technology-based models

• Limited-service brokerages

• Boutique firms

• Exclusive buyer brokerages

• Exclusive seller brokerages

• Limited-function real estate referral companies

• Brokerages that specialize in specific market segments (e.g., luxury homes, trophy properties, new home specialists, bank REO properties, waterfront properties, land, and farms)

How do agents get compensated? – Most agents are independent contractors whose earnings are reported on IRS Form 1099. Pay is typically based on a fixed “percent split” of the sale commission. For example, if a brokerage charged a 3% commission on a $500,000 house sale (i.e., $15,000 commission), an agent on a fixed 50/50 percent split would receive $7,500, with their brokerage firm keeping the other $7,500.  

Here are some other types of commission plans:

• Tiered commission plans that increase an agent's commission split as they increase their sales production

• Capped commission splits that allow an agent to receive 100% of the commission after a set threshold, or "cap," is met

• Commission plus annual profit sharing

• 100% commission minus a monthly fee and/or a per-transaction fee, paid to the brokerage

Less commonly, agents may be employed by a brokerage and earn a salary, with or without a share of profits or a production bonus. 

Before choosing a brokerage, make sure you know exactly how you will be compensated, and make sure you get it in writing. 

We’ll continue with the next part of our series in our edition on Friday, but start with these resources before you choose a brokerage. 

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Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“Your time is limited, so don’t waste it living someone else’s life.” — Steve Jobs

Each day is a gift – a chance to live the life you want. Ruthlessly focus on your goals. Don’t let your past or the fear of being judged distract or paralyze you. Choose to live with an integrity that you can be proud of.

Have a wonderful 4th of July, friends, and I’ll see you back here next Friday!

- James