Monthly Report: July 2025

United States 

Macro-wise, core inflation in the US came in on par with expectations MoM and was 0.1% higher on a year-on-year basis. The unemployment rate remained stable at 4.2%, while non-farm payrolls were the main disappointment last week, coming in at 73K versus the expected 110K. This latest print had an impact on market expectations for future rate cuts, reversing the talk from Powell in the latest FED meeting, which highlighted the central bank’s main worry at the moment - the potential inflation impact of tariffs. The US manufacturing index remained in contraction territory at 48, missing the expected 49.4. On the positive side, US GDP grew by 3% quarter-on-quarter, beating the 2.5% expectation, and retail sales increased by 0.6% compared to the 0.3% forecast, reversing the 0.9% decline seen in May.

Overall, the macroeconomic picture remains fairly stable in the US, with no major deterioration in the underlying data, except for the recent non-farm payrolls print. Inflation remains stable, and the real impact of tariffs is yet to be seen, as most tariffs have only just been implemented, and the main trade deals with the EU and China are still under negotiation. 

The housing market remains directionless, with no meaningful change in mortgage rates. Existing home sales have been declining as existing home prices have been rising, while new home sales have suffered even more, with prices remaining subdued in recent months. The latest homeownership rate dropped to 65% for Q2, the lowest level since just before the COVID-19 pandemic. For context, the peak of homeownership was 69.2% in 2004. 

Existing home sales declined by 2.7% month-over-month, to 3.93 million units, erasing the recent gains and falling short of expectations of 4.01 million units. As the second chart below shows, this now marks the lowest number of sales since September 2024.

This doesn’t come as a huge surprise since median prices were at their highest level ever seasonally and have been rising for 24 consecutive year-on-year prints. The median price of existing home sales continues to rise steadily throughout 2025. 

Sales of new homes increased by 0.6% in June to 627,000 units, slightly up from the seven-month low we saw in May (623,000). We continue to see pressure on the new homes market, as high mortgage rates continue to dictate the trend. We are now at a total of 511,000 unsold homes, which is the highest level since the 2007 financial crisis. What is particularly troubling is that last month, new home sales collapsed by 13.7% and we didn’t see any material correction in the data this month. 

The median prices of new home sales have also been dropping sharply over the last two months, officially at the lowest level for the year and approaching lows not seen since the end of 2024. 

The total housing inventory in the US has been climbing steadily since November 2024; however, it has decreased slightly this month. We are still at the highest level since COVID-19.

Once again, mortgage rates remain persistently high as the base rate from the FED remains constant. Both the 30-year and 15-year rates are higher by around 5 basis points month-on-month, reversing the 10-basis-point decline from the previous month. 

United Kingdom

Macro-wise, all the prints in July were negative and missed forecasts. Inflation and unemployment both ticked up by 0.1% to 3.6% and 4.7% year-on-year, respectively. GDP contracted by 0.1% month-on-month, despite the 0.1% forecast, and retail sales grew by 0.9% vs. the 1.5% consensus forecast. Manufacturing PMIs remained below 50 for the 6th consecutive month. At the same time, the services PMI was also a miss (51.2 vs 52.9 expected). 

For Housing, last month, 64,200 mortgages were approved, beating expectations of 62,000 and marking a third consecutive month of growth. From their lows in 2023, approvals have been rising steadily as UK houses have become more affordable due to lower mortgage rates, relatively subdued price gains, and lower interest rates overall. The typical home now costs 5.75 times the average income, significantly lower than the 6.9 recorded in 2022 and the lowest level in the last decade or so. 

Looking at house prices, the Halifax House Price Index remained unchanged month-on-month and increased 2.5% year-on-year, beating the forecasts of -0.2% and 2.2%, respectively.

Another measure of UK house prices, the UK Nationwide House Price Index, rose 0.6% month-on-month for July, rebounding from the 0.9% drop recorded in June and beating expectations for just a 0.3% increase.

The Residential Market Survey by RICS showed that the house price balance (the difference between respondents reporting price increases and declines) came out at -7% for last month, marking the third consecutive month of declines and the lowest reading in the last eleven months. Interestingly, the RICS survey has been contracting ever since the stamp duty tax was increased, which makes sense given it’s a survey.  

China 

China’s industrial production continues to rebound, showing strong year-on-year growth, with the latest print at 6.8% compared to the 5.5% forecast. Retail sales remain in growth territory, coming in at 4.8% year-on-year; however, this is a miss from the expected 6.1%. Like most major economies, the manufacturing sector remains in contraction, with the latest print at 49.5; however, a solid improvement was noted in the latest month. Both inflation and GDP growth remain stable at around 0.1% month-on-month and 5.2% year-on-year, respectively. 

China’s new home prices in 70 cities declined by 3.2% year-on-year in their latest print, an improvement from the 3.5% drop recorded in the previous month. This marks the 24th consecutive month of declines, but it is also the slowest decline since April 2024. The main city showing increases in house prices remains Shanghai. 

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References

(n.d.). US Treasuries Yield Curve. US Treasuries Yield Curve. https://www.ustreasuryyieldcurve.com/

(n.d.). CME FedWatch Tool. CME Group. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

(n.d.).Trading Economics. Trading Economics. https://tradingeconomics.com/united-states/nahb-housing-market-index

(n.d.).Goldman Sachs. Goldman Sachs. https://www.goldmansachs.com/

(n.d.).Bloomberg. Bloomberg. https://www.bloomberg.com

(n.d.). FRED. Federal Reserve Economic Data. https://fred.stlouisfed.org/

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