The two big housing market trends to watch in 2025

Key Points

  • Affordability remains a significant challenge in the U.S. housing market, with home prices up and mortgage rates over 7%.
  • Seller activity is showing signs of returning to normal levels, with more new listings compared to previous years.

Summary

The 2024 housing market data reveals two major trends as we enter 2025: affordability issues and an increase in seller activity. Despite a slight uptick in home sales towards the end of 2024, affordability remains at its worst in decades, with mortgage rates exceeding 7% and home prices increasing by a few percent nationally. The typical mortgage payment has reached an all-time high, exacerbating the affordability crisis. While some markets in the South have seen minor price adjustments, there's no indication of a significant correction. The market's sensitivity to high mortgage rates could jeopardize sales growth if rates remain high into the first quarter of 2025. However, there's optimism about a potential drop in rates, which could alleviate affordability pressures. On the supply side, there are signs of more sellers entering the market, with new listings showing a slight increase compared to previous years, although inventory remains tight. The data suggests a cautious optimism for 2025, with potential for sales growth if economic conditions favor lower interest rates.

yahoo
December 30, 2024
Crypto
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