June 2, 2026 – Could a June Gloom Become a Precursor?

Economic Commentary

For those who live in California, the term June Gloom should not be a surprise. For the rest of our readers, the June Gloom is a period of cloudy, cooler days in late spring and early summer especially in Southern California.  It is a precursor for sunny, hotter days on the way. Well, this spring has been comprised of cloudy cooler days for the economy and especially the real estate market.  But there is potential for sunny and hotter days ahead.  Mind you, cloudy and cool is not the same as cold and miserable.  We have had some decent economic numbers released this spring. But in no way can we describe today’s economy as hot.

What would it take to heat up the real estate market? That would take three major ingredients.  First, lower inflation, which would lead to lower mortgage rates. Second, more housing inventory. Third, some semblance of peace in the Middle East, which would lead us back to the first ingredient. More importantly, it would add a sprinkle of consumer confidence which is always an important seasoning for a warmer economy and housing momentum. And perhaps a hot economy would not be a great idea anyways. Just a bit warmer would do the trick without igniting more inflation in the long run.

This week we will get a reading which will tell us more about the state of the economy. On Friday, May’s jobs report will be released.  April was the first month of stable jobs growth after a roller-coaster first quarter. In January we added 130,000 jobs, in February we lost 156,000 jobs and in March we gained 185,000 jobs.  April was a more stable gain of 115,000 jobs. Analysts are only expecting around 55,000 jobs to be added, thus another gain of 100,000 or slightly more jobs would be welcome – especially if the unemployment rate stays steady at 4.3%. Of course, the analysts will be looking at wage growth closely as inflation has been heating up due to the rise in energy prices.   

Weekly Interest Rate Overview

The Markets. Mortgage rates were relatively stable in the last week, though they trended downward as news of a possible Iran solution was hitting the wires. According to the Freddie Mac weekly survey, 30-year fixed rates rose slightly to 6.53% last week from 6.51% the previous week. In addition, 15-year loans also increased to 5.87%. A year ago, 30-year fixed rates averaged 6.89%, 0.36% higher than today. Attributed to Freddie Mac: “The 30-year fixed-rate mortgage averaged 6.53% this week. Pending home sales have increased three months in a row, indicating there’s latent demand and homebuyers are ready to jump back into the market if mortgage rates decline.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

Realtor.com® released its first quarter 2026 New Construction Insights Report, revealing a tale of two housing markets: an urban new construction market defined by scarcity and steep premiums, and a suburban one marked by stability and competitive pricing. The report finds that while new construction has shown remarkable resilience overall, where new homes are being built is shaping who can afford them and how much they will pay. Urban new builds are rare. Nationally, just 10.9% of new construction listings are in urban zip codes, compared to nearly 30% of existing homes. When they do appear, buyers pay a significant premium: urban new construction carries a 78.4% premium over urban existing homes, with a median listing price of $738,662 versus $414,000 for existing urban homes. “New construction is overwhelmingly a suburban story in the United States, and that has real consequences for buyers who want to live in cities,” said Joel Berner, senior economist at Realtor.com®. “Urban new builds are difficult to deliver, and that difficulty is priced in. When a new home does come to market in an urban zip code, it commands a price that reflects just how hard it was to build there.” New construction homes for sale are overwhelmingly located in suburban areas and that impacts their price. Nearly 80% of new homes for sale are suburban, compared to just over 55% of existing homes. Suburban new builds carry just a 7.0% premium over suburban existing homes. Suburban new construction is plentiful, competitive, and concentrated in the South, where listing prices tend to be lower. Urban new construction is a different market entirely. New construction is underrepresented in urban areas. Nearly 30% of existing homes for sale are in urban zip codes, but just over 10% of new construction homes are.  Source: Realtor.com®

About 85% of homeowners spent money on an unplanned home repair in 2025, according to a report from Clever Offers. The firm’s report found that half of American homeowners say their home needs some repairs or renovations that they can’t afford right now; two-thirds (65%) admit they’ve ignored a home maintenance task within the past five years. But putting off maintenance resulted in repairs that could have been avoided for nearly one in three homeowners. Of those, 72% spent at least $1,000 on a preventable repair and 44% spent at least $5,000. Among homeowners who have renovated in the past five years, 70% went over budget and 58% have at least one regret, including spending too much money (22%) and the renovation taking too long (16%). Clever Offers found that 30% of homeowners have gone into debt completing a renovation project and 19% have had to stop a project early due to unexpected costs. Over half of homeowners (58%) have nothing saved for emergency repairs. Among those with savings for renovations, 32% have less than $5,000 and 60% have less than $10,000. Nearly half of Americans (46%) plan to spend more on renovations in 2026 than in 2025, including 46% who expect to spend $5,000 or more and 28% who plan to spend at least $10,000. Although half of homeowners (51%) say they’ve spent more on renovations than planned since purchasing their home, 64% would rather renovate than move to a home that’s already been remodeled.  Source: The MBA

U.S. population growth slowed notably in the latest population estimates from the U.S. Census Bureau, with the nation expanding by just 0.5% in 2025, roughly half the pace of the prior year. The deceleration was primarily driven by a sharp decline in net international migration, which dropped from 2.7 million to 1.3 million, while natural change remained relatively stable. Population growth remains concentrated in the South and parts of the West, while many areas in the Midwest and Northeast experienced slower growth or population declines. These forces are not only redefining where population growth occurs but also reshaping the geographic foundations of housing demand. At the county level, population growth slowed across much of the country, with a majority of the nation’s 3,143 counties and the District of Columbia experiencing decelerating population growth in 2025. Of the 2,066 counties that grew in 2024, nearly 80% saw their growth slow or reverse last year. In many cases, counties already experiencing population loss saw those declines deepen further. Net Domestic Migration (Americans moving from one county to another) has become the most visible driver of county-level divergence. Population flows continue to shift away from the largest and most expensive counties toward smaller and less densely populated areas.  Collectively, the 50 counties with population exceeding one million recorded a net domestic migration loss of 637,634 in 2025. In contrast, large counties with populations between 50,000 and 999,999 posted a combined gain of 533,766 residents, while medium-sized counties with populations between 15,000 and 49,999 gained 95,095. Even the smallest counties, with population below 15,000 residents, recorded a slight net gain of 8,773.  Source: The National Association of Home Builders