Will we see housing prices fall in 2025?

The median prize for all homes in the US this week is $ 421,000. If you want to buy a home this is what is available. What is noted is that this home price metrics is now 0.7% during the same time last year. It is important to note how unusual this is in the long term.

This is a signal of national housing prices that fall from last year. This market is quiet as long as mortgage rates are over 7%. We see it in demand for home and deliver growth, and we also see the impact of higher mortgage rates on house prices.

By the end of January each year, you can already see the course that house prices will take for the whole year. By 2022, it was the end of the post-pandemic boom, and buyers rushed to get a home before the mortgage rates climbed, so there was a steep price value in the first half of the year. Home prices rose weekly and were 10% to 15% more expensive than the previous year.

By 2023, the spring slope was much less steep. Then 2024 still started a little higher. But in June, the prices peaked for the year while remaining during the top of June 2022.

By 2025, the award assessment basket is still flatter. Although the best new inventory hits the market every week, these are priced cheaper than last year. Home sellers and listing agents know where the demand is at home. They also understand the affordable crunch that buyers are facing, and therefore they price the lists a little lower than last year at this time.

Meanwhile, the median prize on the new contracts pending this week came at $ 384,700, which was an easy jump from last week. The median price, which was paid recently paid home sales, has on average been an average of 2% more than a year ago. This measure still shows barely positive gains at home prices, while the active lists are negative.

Remember that not all home prices are negative. Some still show positive changes in home prices compared to last year. There is nothing in any of January’s home price data to show some growing momentum. It’s negative.

Here is a bright point-20125 is the third year of flat home prices. Over the past few years – and hopefully over the next few years – incurred incurred faster than house prices. When that happens, affordable prices improve. This market is slowly improving affordable prices across the country. At some point in the future, the cost of money will fall and it will be a dramatic benefit of affordable prices.

Price reductions are more common

Let’s use the percentage of housing on the market with price reductions as an indicator of future sales prices. Right now, 33% of the active lists have taken a price cut from the original list price. At this time last year it was 31%. Several salespeople are facing an absence of buyers’ demand, causing them to reduce their price -enhancing.

By 2023, this number was 33.9%. The weakest pricing moment in the last three years was the fourth quarter of 2022. In January 2023, price cuts were still elevated. But at that moment we were surprised at how fast the market was recovering. It fell by 80 or 90 basic points (BPS) per Week compared to 50 bps now.

At the end of February we have most price reductions in every February for many years.

This is home that is on the market now, without offers. They take a price cut and hopefully get an offer in February. This deal closes in March, and in April you need to hear the headlines that reflect the weakness we can see in the active market data.

And when we look at the supply data, the supply of active furniture continues to grow. It says these price developments are ready to continue.

New lists are up from last week

On the supply side, there were 51,000 unsold new lists this week. That’s 13% more than last year at this time. There were 4% more sellers, including the immediate sales. The growing supply pattern is healthy if we also have more buyers. But with high costs and no signs of decline are buyers.

We also finally return to normal levels of sellers and unsold stock after the pandemic. We want to see this curve grow every week at the top in June. I do not expect we will see 100,000 new lists in a given week this year, as we did in the previous decade, but we can hit 80,000.

More sellers mean more choices for buyers. It also means less upward pressure on housing prices that we see now. More sellers involve improving affordable prices – especially over time.

Inventory climbs to third week

There are now 637,000 single -family houses that have not been sold on the market, an increase of 0.7% from last week and 26.5% more than a year ago. This year we may already be past the low stock for the year. Weeks ago we counted 624,000 homes on the market. We’re at 637,000 now.

Most years experience a few down weeks with less stock before the spring season really starts in February. So far this year we have only had weeks. That is, fixtures build earlier in the season. This is a function of slightly more sellers and still fewer buyers. Homebuyers are waiting.

Awaiting sale of housing remains stagnant

Although the fourth quarter showed improvement in sales volume, these sales gains in December are away. There were 52,000 new contracts pending this week. Last year, 56,000 sales started in the same week in January. That’s 7% fewer sales compared to last year.

There are 266,000 single housing in the contract pending the phase, which is 3.5% fewer than last year. Last week fell pending sales 2% years over years. The data for condominiums is even weaker.

Our immediate demand was 7% fewer than last year and we have an average of 9% fewer sales in the last few weeks.

In the fourth quarter, sales came in over the previous year. The mortgage rates rose over 7% in December, which is why we are now seeing the retirement in the buyer’s demand. We see it in prices and weekly offers.

Mike Simonsen is the founder of Altos Research and will be a highlighted speaker at Housing Economic Summit in Dallas on February 26th. Learn more here.