As 2024 wraps up, active home listings are up 12% compared with last year, which might sound like good news for buyers. But dig a little deeper and the reality isn’t so simple.
The Supply Pile-Up
The hike in active home listings comes from houses sitting on the market longer. With mortgage rates fluctuating and economic uncertainty lingering, buyers are taking their time—or stepping back altogether. Homes now stay listed for a median of 45 days, six days longer than last year, causing inventory to pile up and give the impression of abundant supply.
But while supply has risen to four months, it’s still shy of the five months typically seen in a buyer’s market. Sellers are holding their ground, with median asking prices up 5% to $376,000.
On the other hand, buyers are growing more cautious, reflected in the slight dip in the sale-to-list price ratio to 98.4%.
Demand Dips Amid Rising Costs
High mortgage rates continue to choke buyer enthusiasm. The daily average 30-year fixed mortgage rate reached 7.16% in late December, higher than the 6.67% recorded a year earlier. For buyers, this translates into steep monthly payments: the median mortgage payment rose 7.1% year on year to $2,519.
Although Redfin’s Homebuyer Demand Index shows a small 4% year on year increase, touring activity remains much lower than at the start of the year. Google searches for “home for sale” are down 26.1% compared with December 2023, indicating tepid buyer interest.
Regional Disparities
National averages don’t tell the whole story—local markets vary widely. Cities like Philadelphia and Milwaukee posted big jumps in median sale prices, up 17.1% and 14.3%, while Detroit led with a modest 7.8% rise in pending sales.
Meanwhile, places like San Antonio and Orlando faced sharp drops in pending sales, with San Antonio seeing a 17.4% plunge. New listings also fell in these areas, hinting that sellers might be pulling back as demand weakens.
The Implications for 2025
The direction of the housing market in 2025 will depend on interest rates, economic stability and buyer confidence. Right now, surging supply and softer demand hint at a possible market reset. Yet with 25.1% of homes selling within two weeks—down slightly from 27.1% last year—the market is holding steady, not spiraling.
One critical factor to watch is months of supply. If inventory keeps growing while demand lags, sellers may need to lower prices to compete. On the flip side, hesitant buyers could return if mortgage rates stabilize or drop, helping the market avoid a steep decline.
A Buyer’s or Seller’s Market?
The housing market is anything but predictable right now. Sellers seem to hold some power with higher prices and firm asking rates while buyers find opportunities in growing inventory and slower sales. As 2025 nears, the balance of power will depend on how those forces play out.
