Current market conditions

Home sales increased late last year

Nationwide, existing home sales increased by 4.8% month-over-month in November 2024 to a seasonally adjusted annual rate of 4.15 million, according to the National Association of Realtors.

NAR Chief Economist Lawrence Yun noted that home momentum has increased as buyers acclimate to a higher interest rate environment.

“More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6% and 7%,” Yun said.

Mortgage rates held between 6% and 7% in December 2024 and have maintained these numbers heading into 2025. As of Jan. 2025, a 30-year fixed-rate mortgage averages 7.04%, while a 15-year fixed-rate averages 6.27%.

While prospective homeowners have hoped that rates will drop, experts are adamant that current rates should be considered here to stay.

“They should decline some,” says Sam Khater, Freddie Mac’s Chief Economist, in comments to NPR. “But I think the new normal is 6 to 7% in this world of strong economic growth and steady inflation.”

Inventory is up, but so are the days on market

According to the St. Louis Fed, the active listing count—which includes single-family homes, townhomes, and condos—hit 871,509 in December 2024. This was a notable increase from December 2023 (21.93%), although the days on the market increased from 61 to 70 year-over-year, owing to buyers’ difficulty jumping into the fray.

President Trump issued an executive order after taking office this year for “emergency price relief” on housing, intended to “lower the cost of housing and expand housing supply.” However, as the directive currently lacks any details, experts have questioned how effective such an order will be.

Similarly, experts have previously stated that housing inventory is expected to increase this year due to market conditions, even if mortgage rates aren’t expected to drop.

“Both buyers and sellers have been on the sidelines lately — buyers because of high rates and sellers holding off because those buyers aren’t biting,” says Clint Jordan, a real estate agent with Keller Williams Partners and founder of 719 Veterans Home Team, in comments to CBS News.

While buyers wait for relief, top agents surveyed by HomeLight reported that first-time buyers particularly feel the strain, as they are priced out and hoping for a way to enter the market.

According to data from the National Association of Realtors (NAR), the number of first-time homebuyers on the market is at a historic low—only 24% of buyers made their first home purchase in 2024, compared to new homeowners comprising 40% of the market before 2008.

Prices are also expected to increase, making it even more difficult for first-time buyers to get a foothold.

NAR expects existing home prices to increase by 1.8% in 2025. Similarly, Fannie Mae expects prices to increase by 3.6% this year.