Is it possible to trigger events when a linetrace STOPS hitting an actor?

I have this current grid system set up. When a raytrace hits an object, it changes the material of that object, like so.

As you can see, when a raytrace hits an object, the objects material stays changed.

Is there a way to edit object properties, only when hit by a raytrace?

So you are selecting only one block at any given time, and this selection is not called at every tick, right?

You should make an object reference variable for your actor that calls the linetrace, and store there the last selected cube. Whenever you cast a new trace, you can check if they are the same, and if not, then you can change the stored one back, and change the new one to the selection material and reset your reference variable to it.