As 2024 drew to a close, U.S. homebuyers received a much-needed boost: new listings rose by nearly 8%, giving them more options in a market that has been tight for much of the year.
However, high mortgage rates and a small drop in pending sales meant buying a home was still tough.
Key Takeaways
- New listings rose 7.7%, providing buyers with more options.
- Median sale prices rose 6.4%, with monthly payments at a median of $2,515.
- Mortgage rates hovered near 7%, dampening demand.
- Cities like San Francisco and Milwaukee posted significant gains while Orlando and Houston lagged.
A Brighter Start for Buyers?
New home listings rose 7.7% in 2024 compared with last year, giving buyers more options in a market where homes have often been in short supply. Active listings also grew 9.7% to more than 905,000 homes by December’s end.
This inventory equals 4.2 months of supply, slightly more than last year and is moving closer to a balanced market.
However, affordability is a big concern for many. The median sale price rose 6.4% to $383,750, the largest annual jump since October 2022. With mortgage rates at 6.91%, the average monthly payment now is $2,515—making homeownership a stretch for many buyers.
High Mortgage Rates Weighing on Demand
Mortgage rates hovered near 7% to start 2025, below the highs of late 2024 but still much higher than the 6.7% average a year ago. The elevated rates have tempered buyer enthusiasm, as evidenced by a 17% year on year slump in mortgage-purchase applications.
Other indicators of buyer demand also show a subdued market. Touring activity, as measured by ShowingTime, was down 52% from the start of the year, and Redfin’s Homebuyer Demand Index fell 1% compared with last year.
Even with a 30% month on month jump in Google searches for “homes for sale,” the overall scenario suggests many buyers are hesitant to dive into the market under current conditions.
Regional Highlights
While national trends give a general overview, regional differences tell a more detailed story. Cities like Milwaukee, Cleveland and Philadelphia registered double-digit gains in median sale prices, showing strong demand in these areas.
Meanwhile, places like Orlando and Houston posted drops in pending sales, indicating less buyer interest.
San Francisco stood out with a big 48% rise in new listings compared to last year, followed by Oakland (36.6%) and Seattle (21.6%). On the other hand, cities like San Antonio and Detroit had sharp declines in new listings.
The Road Ahead
As 2025 begins, the housing market is at an inflection point. The rise in inventory provides a glimmer of hope for buyers but budget limitations remain a formidable barrier. Painful mortgage rates and rising home prices are likely to keep some would-be buyers on the sidelines, even as others take advantage of the expanded selection of homes.
