The total number of unsold homes on the market to start 2025 is just 18% fewer than at the start of 2018, seven years ago. In 2018, mortgage rates and inventory rose all year. When rates rise and stay high, like in 2018 or the last three years, inventory grows.
Since there’s no sign of mortgage rates falling substantially, we expect inventory to keep climbing throughout 2025.
The holidays are a really slow time for new listings of course. We’ll see a little bounce in next week’s new listings data. So let’s take the opportunity to look at a slightly different view of seller volume. I haven’t showed this view in a while. We counted fewer than 20,000 newly listed single family homes this week. The New Year’s holiday on Wednesday really slows everything.
We can track new listings in two groups: those that are listed and are now active inventory awaiting offers. And, those that are immediate sales. These are new listings that take offers within a couple days of listing and go into contract immediately. They’re not in active inventory, they’re already in the sale process. We started tracking immediate sales during the pandemic, since the market at that time was dominated by multiple offers and bidding wars. Buyer competition led to all kinds of craziness. That competition is almost completely gone now and the immediate sales are finally almost all gone, too. We counted only 2,700 immediate sales this week.
About 13% of the new listings are sold immediately now. That’s down from 35% during the pandemic when one in every three homes was sold as soon as it hit the market.
Pending home sales increase
That’s the supply side. Let’s look at the demand slide. This is where we’re watching to see if the trend is changing.
There are 260,000 single-family homes in contract right now. That’s roughly 5% more than a year ago. Any sales growth over 2024 is welcome, but the total count of pending home sales is still 35% fewer than when we started 2022 at the end of the pandemic.
A little growth seems to be in the works for this year. And as I mentioned, the holiday weeks are very hard to measure precisely. But, if we look at just the newly pending sales for December, December 2024 shows no sales growth over a year ago.
It looks to me like home sales momentum faded in December. I don’t have a way to tease out how much of the recent weakness in sales momentum is due to rates or holiday placement. But starting next week, each week give a clearer and clearer signal about how sensitive would-be homebuyers are to the cost of money right now.
At HousingWire we’ve forecasted 5% home sales growth in 2025. 4 million home sales in 2024 grows to 4.2 million in 2025. The recent data is worse than that forecast.
Home prices remain resilient
On to home prices. Home prices stayed remarkably resilient nationally in 2024 in a year where unsold supply of single family homes grew by 150,000. Home prices finished the year up about 4% over the end of 2023.
The median price of the homes going into contract now is just under $377,000. See at the far left side of the chart, the 2025 line is starting the year above previous years. That’s only 2.3% above the same week a year ago. This is the national view, so some markets, like in the northeast, have seen home prices increase by 10% in 2024.
We expect the general trends from 2024 to continue in 2025, but less pronounced. Home prices will probably inch higher nationally, but move less than 2024.
Days on market continues to rise
Homes are staying on the market nearly 80 days now, 78.7 days. That’s almost 20% longer than a year ago. During the pandemic it was down closer to 20 days at the peak of the craziness. This average takes a while to adjust because in slow times some homes sit around for many months.
Later in March, when we have the most fresh inventory, new listings each week and the demand, that’s when days on market starts declining for the season. Homebuyer demand peaks at the end of June, and so the market time cycle starts climbing again in the later summer.
One last note on days on market: In the Altos data we track total days on market. If a home has no offers, and gets pulled over the holidays and then relisted in the spring, we’ll count the total period. Sometimes sellers test the market and withdraw a listing that gets no offers. There aren’t a crazy number of withdrawals now, but that level is slightly elevated, so we’ll see some relistings this spring and that will drive the days on market number higher.
Mike Simonsen is the founder of Altos Research and will be a featured speaker at the Housing Economic Summit in Dallas on Feb. 26. Learn more here.
