Jan 27 2025 4 mins 1
The current state of the US housing industry is characterized by a mix of challenges and potential improvements. As of January 2025, the housing market is expected to face continued headwinds due to elevated mortgage rates and insufficient inventory levels, despite recent improvements[1].
Mortgage rates have risen to 7.08% as of early January 2025, after dipping to 6.2% in September 2024. Experts predict that rates will moderate but not decrease substantially, keeping affordability a significant issue in 2025[1]. The National Association of Realtors (NAR) reported a 3.8-month supply of housing inventory at the end of November 2024, which is still below the 5 to 6 months needed for a balanced market. However, this represents a 17.7% improvement from a year ago[1].
Home prices continue to rise, with a 4.7% increase in November 2024 and forecasts predicting a 3.0% average increase for 2025[3]. Despite these challenges, home sales saw an increase in November 2024, with sales rising 4.8% year-over-year, indicating that buyers are adjusting to the new normal of mortgage rates between 6% and 7%[1].
The market is expected to remain a seller's market in most areas due to limited inventory, although regions with a surge in inventory may lean towards a buyer's market and be susceptible to price declines[1]. The National Association of Home Builders (NAHB) reported that future sales expectations were up to a nearly three-year high, with builders anticipating future regulatory relief in the aftermath of the election[1].
In response to current challenges, industry leaders are focusing on new construction to increase inventory, as existing-home inventory is not expected to grow significantly due to high mortgage rates[1]. The NAHB's Housing Market Index (HMI) data released in December found that builders are expressing concerns about high interest rates, elevated construction costs, and a lack of buildable lots, but are also anticipating future regulatory relief[1].
Comparing current conditions to previous reporting, the housing market in 2025 is expected to be more favorable than much of 2024, especially if mortgage rates and inventory levels improve. However, the continued combination of high mortgage rates, steep home prices, and insufficient inventory levels points to 2025 being another tough year for buyers and sellers[1].
Key statistics from the past week include:
- 30-year fixed mortgage rate at 7.08% as of early January 2025[1].
- 3.8-month supply of housing inventory at the end of November 2024[1].
- 4.7% increase in home prices in November 2024[3].
- 3.0% average increase in home prices forecasted for 2025[3].
- 4.8% year-over-year increase in home sales in November 2024[1].
Overall, the US housing industry is navigating a complex landscape, with both challenges and potential improvements on the horizon. Industry leaders are responding by focusing on new construction and anticipating future regulatory relief, while buyers and sellers must adapt to the new normal of elevated mortgage rates and rising home prices.
Mortgage rates have risen to 7.08% as of early January 2025, after dipping to 6.2% in September 2024. Experts predict that rates will moderate but not decrease substantially, keeping affordability a significant issue in 2025[1]. The National Association of Realtors (NAR) reported a 3.8-month supply of housing inventory at the end of November 2024, which is still below the 5 to 6 months needed for a balanced market. However, this represents a 17.7% improvement from a year ago[1].
Home prices continue to rise, with a 4.7% increase in November 2024 and forecasts predicting a 3.0% average increase for 2025[3]. Despite these challenges, home sales saw an increase in November 2024, with sales rising 4.8% year-over-year, indicating that buyers are adjusting to the new normal of mortgage rates between 6% and 7%[1].
The market is expected to remain a seller's market in most areas due to limited inventory, although regions with a surge in inventory may lean towards a buyer's market and be susceptible to price declines[1]. The National Association of Home Builders (NAHB) reported that future sales expectations were up to a nearly three-year high, with builders anticipating future regulatory relief in the aftermath of the election[1].
In response to current challenges, industry leaders are focusing on new construction to increase inventory, as existing-home inventory is not expected to grow significantly due to high mortgage rates[1]. The NAHB's Housing Market Index (HMI) data released in December found that builders are expressing concerns about high interest rates, elevated construction costs, and a lack of buildable lots, but are also anticipating future regulatory relief[1].
Comparing current conditions to previous reporting, the housing market in 2025 is expected to be more favorable than much of 2024, especially if mortgage rates and inventory levels improve. However, the continued combination of high mortgage rates, steep home prices, and insufficient inventory levels points to 2025 being another tough year for buyers and sellers[1].
Key statistics from the past week include:
- 30-year fixed mortgage rate at 7.08% as of early January 2025[1].
- 3.8-month supply of housing inventory at the end of November 2024[1].
- 4.7% increase in home prices in November 2024[3].
- 3.0% average increase in home prices forecasted for 2025[3].
- 4.8% year-over-year increase in home sales in November 2024[1].
Overall, the US housing industry is navigating a complex landscape, with both challenges and potential improvements on the horizon. Industry leaders are responding by focusing on new construction and anticipating future regulatory relief, while buyers and sellers must adapt to the new normal of elevated mortgage rates and rising home prices.
