The Atlanta Federal Reserve’s GDPNow model is projecting strong U.S. economic growth for the second quarter of 2025. As of June 2, the model estimates Q2 real GDP growth at 4.6 percent (annualized). That is a sharp move up from just 2.2 percent a week earlier and suggests the economy may be expanding faster than most analysts expected. Compared to private forecasts, including the Blue Chip consensus, GDPNow is significantly more optimistic heading into summer.

What’s Behind the Shift?

Several key updates in economic data have powered this upward revision. The biggest boost came from international trade. After new reports on exports and imports, GDPNow revised the net export contribution from a negative to a positive driver of growth. Specifically, net exports went from subtracting 0.6 percentage points from GDP to adding 1.45 percentage points. That one shift alone pushed the forecast from around 2 percent to nearly 4 percent by May 30.

Additional updates from the U.S. Census Bureau and Institute for Supply Management also improved the outlook. Consumer spending and business investment both ticked higher in the model. The personal consumption growth estimate climbed from 3.3 percent to 4.0 percent, and private investment flipped from negative territory into modest growth. Stronger-than-expected retail sales, manufacturing momentum, and solid construction activity seem to be supporting that view. Together, these trends pushed GDPNow to its current 4.6 percent forecast.

Real Estate Implications

Housing Demand and Consumer Confidence

In theory, a growing economy supports housing demand. When jobs are stable and incomes rise, people feel more comfortable buying homes. But confidence plays a major role, and that’s been shaky. Consumer sentiment hit multi-year lows earlier this year, driven by inflation and policy concerns. The University of Michigan's sentiment index dropped to 50.8 in May, its lowest reading since 2022.

That said, some positive signs are showing. In mid-May, the Conference Board's consumer confidence index jumped more than 12 points after five months of declines. The outlook index is still cautious, but it appears that fears have eased slightly. As that confidence improves, so should buyer activity. If job growth continues and income rises alongside economic momentum, more households could re-enter the housing market. But if sentiment turns negative again, we may see more buyers hold off.

Interest Rates and Affordability

The catch to strong growth is what it means for interest rates. A booming economy could delay rate cuts from the Federal Reserve, especially if inflation remains sticky. For real estate, that means mortgage rates are likely to stay higher for longer. Over the past year, high rates combined with rising prices have made affordability one of the biggest challenges facing the market.

The Atlanta Fed has acknowledged that mortgage costs and home prices have weighed on both sales and new construction. Right now, most Fed officials only project one rate cut in 2025, and that is assuming inflation continues to trend lower. With 30-year fixed mortgage rates still hovering around 6.5 to 7 percent, many buyers remain priced out. Those who are moving forward are exploring buy-downs, rate alternatives, or waiting for future relief. Until borrowing costs ease, that affordability ceiling will cap how much demand recovers, even in a growing economy.

---

Zooming In: Southeast and Coastal Carolinas Outlook

Economic trends across the Southeast are among the strongest in the country. Both North and South Carolina are outpacing national growth and are projected to continue doing so in 2025. Despite a manufacturing slowdown and a major hurricane in late 2024, the Carolinas expanded by about 3.8 percent last year. Current projections call for 3.1 percent growth this year compared to 2.7 percent nationally. That strength is being driven by steady in-migration, residential development, and rebuilding efforts.

What does this mean for real estate? Demand remains solid. In fact, it exceeded supply last year in many parts of the Carolinas, which fueled price appreciation. Cities like Charlotte, Raleigh, and Charleston all saw large gains. But in 2025, the pace is slowing. Construction is picking up. Forecasts call for around 4,000 new single-family homes to be delivered across the Carolinas this year. That added supply, along with steady job growth, should help moderate home prices and create a healthier balance between buyers and sellers.

Coastal Carolina Focus

In coastal markets like Myrtle Beach, Brunswick County, and Georgetown County, local real estate benefits from strong tourism and population growth. A healthy national economy brings more travel, relocation, and lifestyle buyers to the area. But these regions are still facing the same affordability and insurance concerns as the broader market.

Buyers using financing are especially impacted by high rates, and in some cases, rising insurance costs are adding to the monthly burden. That said, the region’s popularity and economic strength give it an edge. The Southeast has shown stronger-than-average job and population growth, both of which support housing demand. Coastal Carolina markets may see a steadier path through the broader slowdown, but sellers still need to be priced right and buyers still have to navigate financing headwinds.

---

Final Takeaway

GDPNow’s strong Q2 forecast confirms what many in the real estate world are feeling: the economy still has momentum. That bodes well for demand, confidence, and long-term growth, especially in regions like the Carolinas. But for housing, rates remain the wild card. If interest costs stay high, affordability will continue to weigh on buyer activity. The key for both buyers and sellers this year is awareness and flexibility. Know your local market, understand your financial options, and make decisions with a smart, realistic strategy.

---

Sources:

• Federal Reserve Bank of Atlanta, GDPNow Economic Forecast, June 2, 2025

• U.S. Census Bureau

• Institute for Supply Management

• University of Michigan Consumer Sentiment Index, May 2025

• The Conference Board, Consumer Confidence Index, May 2025

• Federal Reserve Commentary and Interest Rate Projections

• Comerica Bank Regional Economic Outlook for the Carolinas, May 2025