This article in general reflects the significance of socio-economic factors and the real estate market in sustainable urban development. The relevance of the research is being determined by the high ratio of the real estate market and construction industry in Latvian and Baltic economic structure, as well as well as their major impact on the state socio-economic status. The objective of the research is to identify the major problems existing in the sustainable development of real estate industry for improvement of the situation. The particular attention will be paid to the problems of socio-economic aspects and related macroeconomic indicators. On the basis of the results of the research the proposals for advancement of sustainable an d competitive development are prepared. The subject of the research is an interaction of socio-economic factors and real estate market over the period from 2009 to 2013.The article reflects the impact of Latvian national economy and real estate market on the sustainable urban development, as well as the main trends in the real estate market and the socio-economic sphere of the country, in the overall context of the development of the Baltic States . The role of the state is reflected in the socio-economic processes regulation, nteraction of the economy and real estate market development, factors influencing the house building, the main challenges and directions of Latvian sustainable development strategies, as well as the correlation of some macro-economic indicators in terms of sustainable development. On the basis of the conducted study, the main trends in the sustainable development of the real estate market and in the socio-economic sphere have been defined, as well as recommendations on improvement of the situation in the longer term and preventive measures have been developed. The historical, logical, analytical and comparative methods have been used in the article.