Slowly but surely, inch by inch, homes are becoming less unaffordable.

Prices for existing homes in the US inched up just 0.2% in July, according to a National Association of Realtors report published Thursday. The near-zero growth rate is the metric’s weakest reading since a 0.9% decrease in June 2023 and “suggests that roughly half the country is experiencing price reductions,” NAR chief economist Lawrence Yun said in a statement. Translation: We’re not at ‘affordable’ yet, but we could be heading in the right direction.

With Apologies to Minnesota

Indicators of a softening housing market have been popping up all summer. A May report from RedFin showed that home sellers outnumbered home buyers in the US by half a million, or the largest figure since 2013. Meanwhile, data from the US Census Bureau for the same month showed new home construction starts fell to a multi-year low as a glut of inventory rose to the highest levels since 2009. And just last week, a National Association of Home Builders survey showed that home builders were offering the most sales incentives since the COVID-19 pandemic.

Thursday’s data is a sign that home sellers are finally feeling the force of multiple market headwinds, though not equally around the country; after all, as Yun said, only roughly half the country is experiencing price reductions. Median home prices decreased in July in both the American South and West, where prices have soared the most in recent years, while median prices increased 0.8% and 3.9% year-over-year in the Northeast and Midwest, respectively.

Still, the near freeze in aggregate price wasn’t the report’s only indicator of home buyers gaining an advantage:

• Home sales ticked up 2% month-over-month in July, besting consensus expectations of a sales decline and signalling that eager buyers are starting to bite at falling prices and other incentives.
• Meanwhile, the minor 0.2% year-over-year price increase (to a median price of $422,400) means that US wage growth is now comfortably outpacing price growth.

One Tiny Step Forward: Yun told Barron’s on Thursday that prices could fall as much as 5% nationwide in the coming months, after increasing around 50% from July 2019 through July of this year. On the other hand, Zillow’s Home Value Index still projects a 0.4% increase in prices in the following year. And while any progress is likely welcome for prospective homebuyers, there’s still a long way to go before home prices tip back toward “affordable.” How far, exactly? According to Zillow estimates, either prices still need to fall another 18% or mortgage rates will need to drop to 4.43% for prices to be affordable to the median US family. Freddie Mac data out Thursday showed 30-year fixed mortgage rates are steady at 6.53%, the lowest point since October 2024. A housing crisis that’s been years — if not decades — in the making will take more than a couple of months to unwind.

American factories are cranking up production with US manufacturing expanding at its fastest clip in three years. The go-to gauge for manufacturing spiked 3.5 points this month, a strong rebound from last month and its biggest gain since May 2022 (a month best remembered for the comeback of “Running Up That Hill”). Factory employment growth jumped the most since a March 2022 high.

US business activity, meanwhile, grew at its quickest pace this year. A monthly business gauge called the flash PMI for short ticked up last month to 55.4 from 55.1 in July. Anything above 50 signals expansion.

But other data suggest tariffs may bear down soon.

‘Made in America’ Sticker Shock

Manufacturing spiked on strong demand last month as factories received more orders and hired workers to fill them. However, an index of sales prices rose at its fastest pace in three years as tariffs wound their way into the supply chain.

Together, that data could mean that factories are passing tariff-related price hikes on to buyers. Soon, manufacturers may have to choose between letting tariffs eat into their profits or hoping demand will remain strong enough that they can keep selling goods at a premium.

The send-it-down strategy could soon cycle down to consumers:

• A measure of the price of goods before they reach shoppers, the Producer Price Index jumped in July to outstrip economists’ predictions. Consumer prices and spending have yet to be hit too hard, but these signals further up the supply chain suggest shoppers will soon feel more of the brunt of tariffs.
• Also delaying the trickle-down, sellers preemptively stocked up on goods they expected to be most impacted by tariff-related price hikes. Their stockpiles of these price-sheltered products could soon run dry, however.

Hot Potato: Tariffs don’t hit shoppers immediately (well, at least those who don’t order exclusively from Temu). They start instead at the top of the supply chain and get passed along. Now, data is starting to show factories passing tariffs down to buyers like they’re playing a game of hot potato — and that potato could soon burn shoppers. But the game doesn’t stop there. Investors are watching inflation closely because if it starts to rise, the Fed may feel the need to reverse rate cuts, tapping the brakes on business activity until prices moderate.

The weather is warmer, the sun stays up longer, labor costs are much lower, and there’s a finance minister waving a €30 million ($34.8 million) check around.

Germany’s Volkswagen confirmed this week that it will manufacture its ultra-cheap ID.1 electric car — planned to retail at €20,000 ($23,000) when it debuts in 2027 — at its Portuguese factory about 25 miles outside of the capital, Lisbon. It forms part of an aggressive strategy to overcome what executives have cast as an existential challenge for VW. Plus, the beaches are nicer.

The Best Defense is a Model Offensive

VW is mired in a sales and cost crisis so dire that, last September, its finance chief, Arno Antlitz, warned the company had “a year, maybe two years, to turn things around.” To keep the engine running and offset plummeting profits, executives plan to cut a staggering 35,000 jobs and find €15 billion ($17.4 billion) in savings by 2030. Sales struggles in North America, where uptake of its EVs has been limited, and in China, where local competitors like BYD and XPeng have done a better job of capturing consumers’ pivot to electric cars, are among the biggest concerns.

The ID.1 forms a crucial part of a strategy to go toe-to-toe with rivals at home and abroad with small, affordable cars. That strategy will begin in earnest next month with the planned debut of VW ID.2all, a €25,000 ($29,000) hatchback that will serve as the first in a line of next-gen EVs. Commencing in 2026, that line will form part of what CEO Oliver Blume, in a speech earlier this year, described as a “model offensive,” with over two dozen new EVs launched by 2030. The ID.1, with its €20,000 price tag, will be the most affordable of the offensive line, with the hope that it can add momentum to some recent wins:

• VW’s overall group sales rose 1.2% in the second quarter, with EVs being the primary driver: global EV deliveries rose 38% and, in Europe, they climbed nearly 73%. EV sales in China, however, dipped 32.6%, a reminder of the urgency of VW’s struggles in the world’s biggest car market.
• It’s been fairly obvious to industry observers that the ID.1 was unlikely to be made in Germany, where higher production costs would mean a higher price tag. So it was little surprise when VW signed a letter of intent earlier this week to produce the vehicle at its Palmela plant. In return, Portuguese Economy Minister Manuel Castro Almeida pledged €30 million in government support, or 11% of the €270 million ($313 million) that VW is investing in the facility.

Down, Not Out: With its rapid growth in Europe, VW replaced Tesla in the first half of 2025 as the top-selling EV brand on the continent. However, Tesla’s Model Y remained the most popular single model, according to data from Jato Dynamics. Tesla, meanwhile, is developing a smaller, cheaper version of the Model Y for a 2026 launch in China, with the goal of expanding production capacity to Europe. That could mean a sub-€30,000 Tesla on the market and possibly the wrong kind of shock for VW’s offensive.