In this market update, we’ll unwrap the latest trends, from interest rates to inventory levels, and offer insights into what to expect as we head into the new year. Grab your cup of cocoa and read on—because this holiday season might just bring some real estate gifts that are too good to pass up.
Homebuying Demand Reaches Highest Level Since Early Spring as Mortgage Rates Decline
Mortgage rates have fallen to 6.69%, down from 6.84% two weeks ago, following a weaker-than-expected jobs report. This has lowered the typical U.S. homebuyer's monthly payment to $2,527, the lowest in over two months. Redfin’s Homebuyer Demand Index is up 8% year-over-year and close to its highest level since April. Mortgage applications are up nearly 20% from last month, and pending home sales rose 4.1% year-over-year in early December. The drop in rates is driving demand, but buyers are also more active now that the election uncertainty has passed and they’ve adjusted to rates staying above 6%. Sellers are responding, with new listings up 7.9% year-over-year as they aim to take advantage of the increased buyer interest.
More Buyers Are Visiting Homes and Applying for Mortgages as 2024 Nears Its End
As we approach the end of 2024, homebuying activity is picking up. Mortgage rates have decreased slightly, which has made homes more affordable, fueling a rise in buyer demand. Redfin’s Homebuyer Demand Index, which tracks home tours and other buyer activities, shows an 8% year-over-year increase, reaching its highest level since April. Additionally, mortgage applications have surged nearly 20% from last month, and pending home sales are up 4.1% year-over-year as of early December.
Although mortgage rates remain above 6%, buyers have adjusted to the current market, and the uncertainty surrounding the presidential election has passed. This has led to more people entering the market in recent weeks. On the selling side, new listings have increased by 7.9% year-over-year, as sellers look to take advantage of the rising demand before the year ends.
January 2025 U.S. Real Estate Market Prediction: A Steady Start to the Year
As we leave December 2024 behind and enter January 2025, the U.S. real estate market is expected to continue at a steady pace, marked by cautious optimism. Mortgage rates are likely to stay above 6%, maintaining affordability challenges for many buyers, though demand will remain relatively stable as more people adjust to the new rate environment. Inventory levels will remain tight, as many homeowners are reluctant to sell due to the higher rates on their current homes, while home prices are expected to level off after years of rapid growth. Suburban and smaller markets will continue to gain popularity, driven by remote work trends and more affordable options compared to larger cities. The rental market will stay strong, as high home prices and interest rates keep many potential buyers in the leasing market. Sustainability will also continue to be a key factor in buyer preferences. Overall, the real estate market in early 2025 is set for a more balanced and modest pace, with opportunities available for those ready to navigate the current landscape.
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Sources: redfin. Forbes. attom.
