The U.S. housing market is showing signs of revival as falling mortgage rates stoke a surge in home tours, applications and pending sales. Buyers and sellers alike are re-entering the market, buoyed by a clearer economic outlook and more stable borrowing costs.
Mortgage Rates Retreat, Easing Financial Pressure
The average 30-year fixed mortgage rate has dropped to 6.69%, down from 6.84% in late November. This follows a weaker-than-expected jobs report, making the Federal Reserve more likely to lower interest rates.
As mortgage costs come down, the average monthly housing payment for U.S. buyers is now $2,527, the lowest in more than two months. The plunge in rates has boosted buyer activity.
Redfin’s Homebuyer Demand Index, which tracks buyer interest based on home tours and agent activity, is up 8% from last year, hitting levels last seen in April. Mortgage applications for home purchases have risen nearly 20% from last month, and pending home sales are up 4.1% year-over-year for the four weeks ending December 8.
Post-Election Market Changes
Aside from lower mortgage rates, two main factors are boosting demand:
- Economic Stability After the Election – The uncertainty about the presidential election has eased, leading to a clearer financial outlook.
- Acceptance of Higher Rates – Buyers seem to have come to terms with the idea that mortgage rates will likely stay above 6% for a while.
Demand is settling into its new, post-election normal, says Chen Zhao, Redfin’s lead economist, adding buyers were hesitant before the election, but now we’re seeing demand return to expected levels.
Sellers Respond to Increased Demand
Sellers are becoming more confident with new listings up 7.9% compared with last year, the biggest hike since June, except for a spike around Thanksgiving.
Many sellers are trying to take advantage of the heated buyer interest. However, the overall number of homes for sale is still limited, with only an 11.3% jump from last year, the smallest rise since March.
Key Housing Metrics Suggest Gradual Recovery
- Median Sale Price – Up 6% year-over-year to $383,875.
- Median Asking Price – Matches the median sale price.
- Median Days on Market – Homes now take an average of 43 days to sell, seven days longer than a year ago, suggesting a minor slowdown in transaction speed.
- Pending Sales – Up 4.1%, a promising sign for the months ahead.
Regional Variations in Market Activity
Although national trends are encouraging, metro-level data shows disparities:
- Biggest Price Gains – Miami (13.3%), Warren, MI (11.5%) and Milwaukee (10.4%) lead in median sale price growth.
- Biggest Declines – Tampa, FL, posted a 0.9% drop in prices, highlighting regional market differences.
- Pending Sales Growth – San Jose, CA (17.2%) and Los Angeles (14.9%) showed strong annual gains. By contrast, Houston (-6.2%) and Miami (-6%) recorded declines.
Outlook
The housing market is picking up thanks to growing economic confidence and lower borrowing costs. Though demand isn’t skyrocketing, the market is slowly recovering and adjusting to new conditions.
As the year ends, both buyers and sellers are taking advantage of the situation. With mortgage rates stabilizing, the trend is expected to continue into 2025. The housing market may not be booming, but it’s offering relief after months of uncertainty.
