In June 2025, the Case Schiller home price index dropped by 0.3% from the previous month, just slightly more than the expected decrease of 0.2%. On a yearly basis, home prices rose by 2.1%, which matched predictions but was lower than last month’s increase of 2.8%. New York City had the highest year-on-year growth at 7.03%. In contrast, Tampa experienced the most significant drop at -2.38%. Monthly changes varied, with Chicago seeing the largest increase of 1.03%, while San Francisco had the biggest decrease at -1.05%.

Cities With Positive Month-On-Month Growth

Cities that showed month-on-month increases included: – Minneapolis: 0.67% – Detroit: 0.58% – Charlotte: 0.47% On the other hand, cities like Seattle, Los Angeles, and Washington saw declines, with Los Angeles dropping by 0.43% and Washington by 0.52%. For year-on-year changes, Chicago rose by 6.09% and Cleveland by 4.47%. Denver, San Diego, and Dallas, however, experienced declines, with Dallas at -0.95% and San Francisco down by -1.98%. The lowest year-on-year change was Tampa’s -2.38%. The June data indicates a month-over-month price drop that was a bit more significant than expected. This trend highlights that the housing market’s momentum is slowing down. It suggests that housing-related assets may continue to decline in the coming weeks. This June information is supported by additional reports from August. In July, existing home sales dropped by 3.5%, and housing inventory rose to 4.1 months of supply, the highest since 2019. High 30-year mortgage rates have climbed back to around 7.2%, affecting affordability and lowering buyer demand.

The Broader Economic Picture

The overall economic outlook offers little relief for the housing sector, likely impacting the Federal Reserve’s decisions. The July CPI report shows core inflation still stubborn at 3.8%, which means we don’t foresee interest rate cuts soon. This stance will likely keep borrowing costs high, acting as a continued challenge for home prices this autumn. Given this situation, we recommend bearish positions on homebuilder ETFs like ITB and XHB. Ongoing weakness in once-popular markets, including San Francisco, Phoenix, and Tampa, signals that builder margins and order books could face pressure. We could buy put options on these ETFs, expecting their stock prices to drop as negative sentiment grows. The data also reveals a distinct divide, with cities like Chicago and New York performing surprisingly well, while places like San Francisco face sharp monthly declines. This divergence suggests a pairs trading strategy could work. We might short a group of companies tied to the struggling West Coast and Sun Belt regions while going long on those in more stable Midwestern markets. Finally, the decline in year-over-year price growth from 2.8% to 2.1% signals rising market uncertainty and potential volatility. This environment makes options that profit from sharp price movements, such as straddles on the XHB homebuilder ETF, a promising strategy. It allows us to benefit from significant price changes as the market reacts to this clear slowdown. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now