Monthly Archives: January 2025

When a contract to buy a home is signed, the sale isn’t yet final. But most contract signings result in closed sales a few weeks later, which is why they’re considered a good indicator of where home sales numbers may be headed. The National Association of Realtors tracks contract signings each month with its Pending Home Sales Index. According to the most recent results, the index found contract signings down in December, falling 5.5 percent month-over-month after four consecutive months of gains. Lawrence Yun, NAR’s chief economist, says the decline isn’t too surprising. “After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising,” Yun said. “Economic data never moves in a straight line. High mortgage rates have not significantly dented housing demand due to greater numbers of cash transactions.” Regionally, the South saw the smallest month-over-month decline, falling just 2.7 percent, while the Midwest dropped 4.9 percent, the Northeast slipped 8.1 percent, and the West decreased 10.3 percent. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were up and down last week. Rates for 30-year fixed-rate loans with conforming balances were unchanged from one week earlier, while rates for loans backed by the Federal Housing Administration and 15-year fixed-rate loans fell. Rates for jumbo loans and 5/1 ARMs both increased. With rates relatively steady, demand for loans to buy homes was also flat, though refinance activity fell 7 percent. Joel Kan, MBA’s vice president and deputy chief economist, says there’s reason for optimism. “Purchase activity decreased slightly, but applications for FHA purchase loans were a bright spot, increasing by 2 percent,” Kan said. “New and existing-home sales ended 2024 on a strong note, and if mortgage rates continue to stabilize and for-sale inventory loosens, we expect a gradual pick up in purchase activity in the coming months.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

The most recent S&P Case-Shiller U.S. National Home Price Index found prices 3.8 percent higher than last year at the same time. The year-over-year gain was slightly better than the previous month’s annual increase of 3.6 percent. But despite the bump, Brian D. Luke, CFA, head of commodities, real & digital assets, says home price increases have slowed. “With the exception of pockets of above-trend performance, national home prices are trending below historical averages,” Luke said. “Markets in New York, Washington D.C., and Chicago are well above norms, with New York leading the way. Unsurprisingly, the Northeast was the fastest growing region, averaging a 6.1 percent annual gain. However, markets out west and in once red-hot Florida are trending below average growth.” Still, despite the regional disparities, S&P’s National Index managed to hit its 18^th consecutive all-time high, according to the latest numbers. (source)

Sales of newly built, single-family homes rose 3.6 percent in December, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development. The improvement pushed new home sales 6.7 percent higher than they were one year earlier and comes after an upward revision of November’s results. In other words, the new home market continues to make gains despite the seasonal patterns, elevated mortgage rates, and higher home prices which should be suppressing sales. That’s good news for buyers, as a strong new home market can help alleviate some of the challenges currently plaguing the market for existing homes. How? Well, when Americans are buying new homes, builders build more, which helps the overall supply of available homes for sale. That provides choices for buyers, which reduces buyer competition, bidding wars, and price increases for homes both old and new. (source)

New numbers from the National Association of Realtors show sales of previously owned homes rose 2.2 percent in December from one month earlier. The improvement pushed sales to their strongest pace since February 2024 and led to the largest year-over-year gain since June 2021. Regionally, sales increased everywhere but the Midwest, which saw a 1 percent month-over-month decline. Lawrence Yun, NAR’s chief economist, says existing-home sales have defied typical seasonal patterns. “Home sales in the final months of the year showed solid recovery despite elevated mortgage rates,” Yun said. “Home sales during the winter are typically softer than the spring and summer, but momentum is rising with sales climbing year-over-year for three straight months.” Also in the report, total housing inventory is now up 16.2 percent from one year ago, putting current unsold inventory at a 3.3-month supply. A six-month supply is generally considered healthy for the market. (source)

The housing market is in a holding pattern, according to the latest forecast from Fannie Mae’s Economic and Strategic Research Group. Market conditions are improving – but slowly. As a result, home buyers remain hesitant even though price increases have calmed and there are more homes for sale. Mark Palim, Fannie Mae’s senior vice president and chief economist, says market conditions aren’t likely to change much this year but there is a silver lining. “Due to lock-in effect and affordability constraints, we currently expect another year of sluggish existing home sales,” Palim said. “A silver lining for affordability is that we also anticipate income growth will outpace both home price and rent growth this year – and in many markets, new homes are now priced competitively with existing homes and are far more available.” The group expects home price increases will continue to slow this year and mortgage rates will fall, though the decline will be less than previously expected. (source)

According to the Mortgage Bankers Association’s Weekly Application Survey, average mortgage rates saw a slight decline last week from the week before. Rates were down for 30-year fixed-rate loans with both conforming and jumbo balances and loans backed by the Federal Housing Administration, while rates for 15-year fixed-rate loans were flat, and 5/1 ARMs saw a week-over-week increase. Mike Fratantoni, MBA’s senior vice president and chief economist, says demand for mortgage applications improved. “Mortgage application volume was little changed last week, but there was a small increase in conventional purchase volume, which brought the level of total purchase volume up almost 2 percent above last year at this time,” Fratantoni said. Week over week, refinance activity slowed 3 percent and total mortgage loan application volume was up 0.1 percent. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Deciding how many bedrooms you’d like in your next home isn’t always just about your family’s sleeping arrangement. Bedrooms, after all, can be converted into many uses. Home offices, for example. Perhaps that’s why Americans now have more extra bedrooms than they’ve ever had before. A new report from the National Association of Realtors’ consumer website found the number of extra bedrooms in the U.S. hit 31.9 million in 2023. That’s more than four times the number of extra bedrooms reported in 1980. Back then, there were just seven million extra bedrooms. Danielle Hale, the website’s chief economist, says the number of bedrooms has been rising while persons per household has fallen. “Since the 1980s, we have seen the average number of bedrooms per home increase, and maybe more importantly, the number of persons per household has declined, creating an environment where we see both the largest number of extra bedrooms and the largest share of extra bedrooms, even with Americans using spare rooms as offices.” (source)

According to Fannie Mae’s most recent Home Price Index, home prices accelerated in the fourth quarter of 2024 after slowing the previous two quarters. The year-over-year acceleration was slight but highlights the delicate balancing act the housing market faces in 2025. Mark Palim, Fannie Mae’s senior vice president and chief economist, says the market is caught between competing factors. “The housing market in 2025 faces a difficult balance act, with a notable decline in mortgage rates likely needed to help unwind the lock-in effect and thaw the supply of existing homes for sale,” Palim said. “However, we believe such a decline would likely jumpstart demand from potential first-time home buyers currently waiting to purchase, which could lead demand to outpace any improvement in supply, further exacerbating already-high home prices and purchase affordability.” Put another way, when mortgage rates fall and affordability improves, buyers will return and – if enough of them do – it will end up putting upward pressure on prices, reducing the impact of any initial improvement. (source)

The National Association of Home Builders surveys builders each month to gauge their confidence in the market for newly built, single-family homes. Survey responses are scored on a scale where any number above 50 indicates more builders view conditions as good than poor. In January, the NAHB’s Housing Market Index rose one point from the previous month to 47. Robert Dietz, NAHB’s chief economist, says the market is facing offsetting factors. “NAHB is forecasting a slight gain for single-family housing starts in 2025, as the market faces offsetting upside and downside risks from an improving regulatory outlook and ongoing elevated interest rates,” Dietz said. “And while ongoing, but slower easing from the Federal Reserve should help financing for private builders currently squeezed out of some local markets, builders report cancellations are climbing as a direct result of mortgage rates rising …” Despite rising rates, though, the index component measuring builders’ expectations for the next six months scored a 60 in January, indicating more home builders are optimistic about the market’s future than not. (source)