As 2024 draws to a close, the housing market presents a mixed picture. While there is an uptick in supply, much of it remains stagnant, with properties languishing on the market for extended periods. This trend highlights significant challenges for buyers and sellers alike as we approach 2025.
Increasing Inventory with Lingering Issues
Recent data from Redfin reveals that active listings in November 2024 rose by 12.1% compared to the same period in 2023, reaching the highest levels seen since 2020.
However, this increase in inventory comes with a caveat: more than half of the listed homes (54.5%) have been on the market for at least 60 days without securing a contract.
This marks the highest proportion for November since 2019 and represents a 50% year-over-year surge.
For homes that did find buyers, the median time to go under contract was 43 days, the slowest November pace since 2019, according to Redfin’s report.
Redfin agent Meme Loggins emphasized the importance of realistic pricing, stating, “A lot of listings on the market are either stale or uninhabitable. Homes that are priced well and in good condition are flying off the market in three to five days, but overpriced properties can sit for over three months.”
Also read: The Optimal Time to Sell Your Home? Insights from Realtor.com
Rising Mortgage Rates and Home Prices
Mortgage rates surpassed 7% in October 2024 and have largely remained at that level, according to Mortgage News Daily. Simultaneously, home prices continue to climb.
The S&P CoreLogic Case-Shiller index reported a 3.6% national increase in home prices in October 2024 compared to the previous year.
Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, noted that the market’s stability prior to the 2024 election likely contributed to these price trends.
“Removing the political uncertainty risk has led to an equity market rally; it will be telling should the similar sentiment occur among homeowners,” he added.
Shifting Buyer Expectations
Pending home sales, which measure signed contracts for existing homes, rose in November 2024 both monthly and annually to reach the highest level in nearly two years, according to the National Association of Realtors (NAR).
This rebound, however, comes from a low base. NAR’s Chief Economist Lawrence Yun explained, “Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory. Buyers are no longer waiting for or expecting mortgage rates to fall substantially.”
Also read: $1 Million Starter Homes Become the New Norm: A Deep Dive into the Housing Affordability Crisis
Challenges for Buyers and Sellers
Despite a slight easing of the seller lock-in effect—where homeowners hesitate to trade their low mortgage rates for higher ones—housing affordability remains a significant hurdle.
CoreLogic’s year-end report indicates that some sellers entered the market due to life events or the need to tap into accumulated equity. Yet, this added inventory has not significantly boosted sales due to persistently high costs.
Selma Hepp, Chief Economist at CoreLogic, pointed out the financial strain on buyers: “The cost of owning a home now, when adjusted for inflation, is at its highest point in decades.
This persistent increase in prices and interest rates has created a challenging environment for both first-time buyers and those looking to move up the property ladder.”
Also read; Home Prices Soar to New Heights, Deepening the Divide in the Housing Market
Broader Implications
The slower pace of home sales does not bode well for the housing market in 2025. Elevated interest rates continue to discourage buyers, with many opting to remain renters longer.
According to another Redfin report, rising costs for brokers, movers, and associated expenses further complicate the decision to purchase a home.
Key Data Summary
| Metric | Value | Change Year-over-Year |
|---|---|---|
| Active Listings (Nov 2024) | +12.1% | Highest since 2020 |
| Homes Unsold After 60 Days | 54.5% | +50% |
| Median Time to Contract | 43 Days | Slowest since 2019 |
| Mortgage Rates (Oct 2024) | 7%+ | Elevated |
| Home Prices (Oct 2024) | +3.6% | Year-over-Year Growth |
Navigating the Market
As we move into 2025, both buyers and sellers must adjust their strategies to navigate this complex market. Sellers should focus on realistic pricing and ensuring their properties are in good condition to attract buyers. Meanwhile, buyers must prepare for higher costs and exercise patience to secure the best deals.
For those looking to invest in real estate, understanding these trends is crucial. The market’s current dynamics underscore the importance of informed decision-making and strategic planning in an environment defined by both opportunity and uncertainty.
References:
- Redfin Housing Market Report, November 2024
- S&P CoreLogic Case-Shiller Index, October 2024
- National Association of Realtors Pending Home Sales Data, November 2024
- CoreLogic Year-End Housing Report, 2024
