The real estate market just got a fresh dose of both reality and opportunity, according to a new June 2025 analysis from Chandan Economics. Their latest report flags two key developments that should be on every agent’s, investor’s, and savvy homeowner’s radar: a clear housing market slowdown and major pro-real estate wins tucked into federal tax legislation.
First, the red flag: new home sales in May dropped 13.7% from the month before, hitting their lowest level since October 2024. That’s not a minor blip. Inventory is rising, discounting is dragging on, and, according to Chandan, some builders are now “halting construction.” If you’re working with buyers waiting for prices to soften, or sellers expecting the frenzy of 2021-2022, this is the kind of shift that can reset expectations fast.
But it’s not all gloom.
The report also notes that office-to-residential conversions are accelerating in a way we haven’t seen in decades. “Nationwide, office space is now being razed or converted faster than it’s being constructed, a first in 25 years,” Chandan notes, citing CBRE data. With 85 million square feet of office space already tagged for residential reuse, this could unlock more inventory in urban cores, even in supply-strained markets like NYC, which alone expects 8,000+ new apartment units from conversions.
On the policy front, there’s even more upside, if Congress finalizes it. The U.S. Senate just passed a version of President Trump’s tax and spending bill that includes a wish list of long-sought real estate priorities. As outlined in the Chandan report:
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Permanent extension of the mortgage interest deduction
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SALT cap increase, starting with 2025 tax filings
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Continued protection for 1031 exchanges and business deductions
It also keeps key Low-Income Housing Tax Credit provisions and gives a boost to Opportunity Zone incentives. Notably, the National Association of Realtors is calling this a “victory” for the industry.
Bottom line: the housing market is clearly cooling, but there’s a policy tailwind forming that could reshape the investment landscape. For agents, this is the time to double down on educating clients. For investors, it might be time to sharpen pencils on conversions and tax strategy. And for homeowners? Keep an eye on rates and legislative timelines—there’s more in play this summer than just the weather.