American Realty Advisors: Tariffs and Fed Policy Shape Real Estate Outlook for 2025

LOS ANGELES — December 2, 2025 — American Realty Advisors (ARA) said in its latest Mid-Quarter Economic Pulse: Q2 2025 report that uncertainty surrounding tariffs and Federal Reserve policy continues to weigh on the U.S. economy and real estate markets. The firm noted that while inflation and unemployment figures remain stable, corporate profit pressures have led to increased layoffs and a pause in some market activity.

Tariffs and Fed Policy Drive Market Uncertainty

According to ARA, the April Personal Consumption Expenditures (PCE) reading showed a rapid cooling of inflation, which could have prompted the Fed to resume rate cuts. However, the uncertain impact of tariffs has delayed any policy changes. The Federal Reserve has maintained its target rate range of 4.25% to 4.50% since December 2024.

ARA stated that the ongoing threat of tariff escalations and potential budget deficits have clouded mid-term inflation expectations. The firm anticipates that the Fed may cut rates once or twice before the end of 2025, as economic growth concerns become a more pressing issue than inflation.

Implications for Real Estate

Despite recent volatility, ARA reported that the impact on real estate has been muted. Transaction volumes increased in the first quarter of 2025 but slowed following early April. Financial and debt markets began to re-engage after the White House extended negotiations on reciprocal tariffs.

Deal volumes in March and April were comparable to those of 2023, and price declines continued to moderate. ARA expects full-year 2025 transaction volumes to align closely with 2024 levels as buyers proceed cautiously amid policy uncertainty.

Market Sentiment and Outlook

ARA’s analysis suggests that clarity in tariff policy could help stabilize both business and consumer sentiment. The firm added that a backdrop of higher tariffs could reinforce structurally higher interest rates, requiring investors to adapt their strategies compared with the post–Global Financial Crisis and pre-pandemic period.

Economic Indicators

The report also examined first-quarter GDP trends, noting a contraction that reflected broader economic caution. ARA emphasized that while short-term uncertainty persists, the long-term fundamentals of the real estate market remain tied to macroeconomic policy decisions and global trade conditions.

Sources

American Realty Advisors. “Mid-Quarter Economic Pulse Q2 2025: Tariffs, Fed Policy, Real Estate Outlook.” Published December 2, 2025.