As the year 2025 begins, the U.S. housing market presents new opportunities for homebuyers. A significant increase in home inventory throughout 2024 has led to a decrease in prices, providing buyers with greater leverage in the market.
The landscape of the housing market has shifted notably from the pandemic-driven competition seen in previous years. According to Realtor.com’s final housing market report for 2024, released in early January, a steady rise in home supply has reduced property prices, offering a less competitive environment for buyers. The median price for single-family homes dropped by 1.8% last month compared to the previous year, settling at approximately $402,502. Despite this, the price per square foot increased by 1.3% year-over-year as buyers focused on smaller, more affordable homes.
The market’s transformation results from a long-awaited surge in home listings, which increased for the 14th consecutive month by 22% compared to last December. The total number of unsold homes, including those under contract, also rose for the 12th straight month by 17.5% from 2023. However, the environment isn’t wholly favorable, as some buyers are hesitant due to elevated mortgage rates which have reached levels last seen in July. These higher rates limit what potential buyers can afford and deter many would-be sellers from entering the market, leading to fewer transactions.
Ralph McLaughlin of Realtor.com noted in the January 2 report that fewer new sellers are joining the market this winter compared to last fall, due in part to high borrowing costs which diminish homebuying power. Nevertheless, pending home listings were 7.4% higher last month compared to a year earlier, but they had surged by 14.7% in November, prior to the recent mortgage rate hikes.
Despite these challenges, Realtor.com’s economists anticipate modest sales growth in 2025, predicting a 1.5% increase. They argue that as mortgage rates eventually decline, the effects that have stalled sales will lessen, leading to a gradual rise in home transactions.
For buyers looking to find favorable market conditions, inventory increased last month in all U.S. regions except one of the 50 largest metropolitan areas, with the South and West seeing supply growth of about 25%, contrasting with 7% in the Northeast. Therefore, buyers are not as pressured to make quick decisions, as homes remain on the market longer than before, prompting 12.9% of sellers to reduce asking prices. This figure is slightly up from December 2023’s 12.7%.
In identifying opportunities, Business Insider reviewed Realtor.com’s data, highlighting 14 large U.S. metropolitan areas where home prices are lower and active listings grew by at least 10%. Among these cities are Atlanta, Georgia, where the median listing price is $399,950 with a 3.6% decline and active listings up by 38.3%. Austin, Texas, sees a 7.7% drop in median price, now at $498,500, and a 13% rise in listings. Meanwhile, Denver, Colorado, exhibits a 5.4% price reduction and a 41.9% increase in active listings, among other cities featured in the report.
These conditions highlight a pivotal moment for buyers who made acquiring a home a New Year’s resolution, as they may find it less challenging than in recent years if they target the right regions.
While the current housing market offers strategic advantages for buyers with increased inventory and reduced prices, challenges remain due to high mortgage rates. Those who navigate these dynamics can find favorable deals in the identified cities, making it a potentially opportune time for buyers to invest.
Source: Businessinsider
