Did the housing market crash in December?

As we enter the promising new year of 2025, the real estate market experiences a familiar yet intriguing trend. The number of unsold homes on the market has decreased by a mere 18% since 2018, signifying a consistent yet gradual shift over seven years. With mortgage rates showing no significant signs of decline, it’s anticipated that inventory will continue to rise steadily throughout the upcoming year.

1. A Slow Start to the New Year:
   • The holiday season typically ushers in a period of reduced activity in new listings. However, a slight increase is expected in the forthcoming week’s data.
   • Currently, fewer than 20,000 newly listed single-family homes grace the market, with the New Year’s holiday marking a significant slowdown in real estate activities.
2. Tracking New Listings:
   • New listings can be classified into those in active inventory awaiting offers and immediate sales that are swiftly sold post-listing.
   • Immediate sales, which were prevalent during the pandemic era, have significantly dwindled, indicating a shift in market dynamics. The current count of immediate sales stands at a meager 2,700 for the week.
3. Pending Home Sales:
   • The number of single-family homes under contract presently stands at 260,000, marking a slight uptick over the previous year.
   • Despite the growth in sales, the total count of pending home sales remains notably lower than pre-pandemic levels, indicating a potentially evolving trend in demand.

As we transition into 2025, uncertainty looms over market reactions to fluctuating mortgage rates and seasonal variations. It remains imperative to monitor these trends to gauge homebuyers’ sensitivity to monetary costs and overall market conditions.

Amidst these dynamic market shifts, the forecast for 2025 anticipates a 5% growth in home sales, projecting a surge from 4 million sales in 2024 to 4.2 million in the current year. However, the recent data suggests a less optimistic outlook, reinforcing the need for vigilance in analyzing market trends.

1. Enduring Home Prices:
   • Despite a surplus in unsold inventory, home prices demonstrated robust resilience in 2024, concluding the year with a 4% increase over the previous year.
   • The median price of homes on contract currently nears $377,000, showcasing a marginal increment compared to the previous year. However, regional disparities persist, with some markets seeing substantial price hikes.
2. Days on Market:
   • The average time for homes to stay on the market has risen to nearly 80 days, marking a significant increase from a year ago.
   • Market dynamics dictate a cycle where market time typically ebbs and flows, with peaks in demand observed around the end of June and subsequent fluctuations during the summer months.

As we navigate through the complex real estate landscape in 2025, it is essential to remain vigilant and adaptable to evolving market trends. The coming months will provide invaluable insights into the interplay between supply, demand, and pricing dynamics, shaping the future of the real estate market.

As we embark on this journey, let us heed the words of Mike Simonsen, the founder of Altos Research, who will share his insights at the Housing Economic Summit in Dallas on February 26. Join us as we unravel the intricacies of the housing market and pave the way for a prosperous year ahead.