2024 was a terrible year for Realtors. Will 2025 be any better?
No Momentum
Existing-home sales fell 0.7% in 2024 from the prior year to 4.06 million, the National Association of Realtors said Friday.
In contrast to the perpetual optimism of Lawrence Yun, the National Association of Relators chief economist, John Burns Research & Consulting has a Different Home Sales Outlook as noted by the Wall Street Journal.
High costs related to homeownership sapped sales again. The average rate for a 30-year fixed mortgage has hovered between 6% and 8% since late 2022, making it prohibitively expensive for many Americans to buy homes at current prices, which hit record highs last year. Rising home insurance and property tax costs are also adding to homeowners’ expenses.
The housing market’s outlook this year depends again on mortgage rates, said Rick Palacios Jr., director of research at John Burns Research & Consulting.
“The starting point for 2025 is, you’re kind of already starting in a spot with not that much momentum,” he said. “I don’t really see how that thesis reverses and gets more optimistic as long as mortgage rates stay at 7%.”
Existing-Home Sales
There does appear to be some momentum heading into January, but not enough to prevent another annual low.
Exp Realty offers this thought.
“Inventory is increasing—that brings people into the market,” said Leo Pareja, chief executive of brokerage eXp Realty. “We think that existing-home sales will marginally increase” in 2025, he said.
A quick check on Mortgage News Daily, shows the average 30-year mortgage rate is 7.11 percent.
What matters most is economic growth, inflation, and how the Fed responds to inflation.
My expectation is a rising deficit with a 90 percent confidence. I fear an international trade war that could lead to instant inflation, instant recession, or both.
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Trump “Will Demand Interest Rates Drop Immediately”
January 23, 2025, Economically Clueless Trump “Will Demand Interest Rates Drop Immediately”
Trump may as well command the tides to stop as did King Canute in a story widely misinterpreted.
Canute did command the tides to recede, but walking away said “All the inhabitants of the world should know that the power of kings is vain and trivial, and that none is worthy of the name of king but He whose command the heaven, earth and sea obey by eternal laws”.
Trump needs that humility, as did Biden. But it’s not to be, as noted in his video address to Davis.
Please see above link commanding interest rates to drop.
I get that it was a bad year for Realtors but what about mortgage companies? The percentage of all-cash buyers vs. first-time homebuyers is nearly the same not to mention investors who will likely prevent any potential bubble from taking place. The single-family rental market is in full force. What are some thoughts on the future of residential mortgage financing?
We can forever resolve housing concerns across the entire spectrum at the 50 state level independently of any national government, all from the private sector in small town America. Under new, lean, smart, caring and honest leadership that empowers everyone, we can actually solve lots of problems unique to every region. Autonomy is self-goverance and the use of the simplest kinds of communication technology and decades old software toolsets. Open source and vertical/horizontal stacks for products & services within everyone’s lifestyle. Build it virtually and visually before the ground is broken on your new dwelling or homestead.
Houses need to be priced around 20% below peak price set in early 2022 when the 30 year mortgage rate was 3%.
For every 1% increase in the mortgage rate there should be a 10% drop in price, and accounting for 25% increase in average household income since early 2022 to present day, I figure homes should be priced at 20% below peak price set in early 2002.
As more people realize the scam of [mortgage backed money creation] from thin air, they will arise in knowledge from finding and studying “Credit River Decision” right now today. The fact that our “signature” on a “promissory note” creates the money, can we resoundingly steer people away from banking liars of every last commercial vestige, toward new ideas in working together to live simple and within our means. We need to obsolete the usury on money creation, right at [Our Treasury] for the people & by the people. NOT THE BANKERS.
Let’s get the annualized rate down to 2M, then I’ll get excited.
There’s only two ways to bring down prices:
A big recession without Congressional intervention with rent & mortgage relief. The good news here is that our debt has gotten so high that it will hopefully tie Congress’ hands in terms of overspending.
Higher for WAY, WAY, WAY longer than anyone thought possible.
I’m fine with either one, but I would prefer the later, since it will put more money in people’s pocket’s through savings rates & won’t hit the stock market as hard. My OKLO, NNE & SMR investments are going bonkers.
Interest rates will go down when inflation does. It’s only been a week for god’s sake, give Trump time.
Trump needs inflation to reduce debt and housing prices. When our national
industries will be ready demand for highly skilled and skilled workers, protected by tariffs, will be high. Their wages will exceed the inflation rate. A good economy lift all wages, ex retirees transfer money and unrealized promises. Higher tax collection and tariffs, along with Fed lower rates will enable the gov to cut debt. The boomers will have to face reality !
Boomers, including EVERYONE THAT I KNOW, are ready for anything. They are down-sizing, traveling, and enjoying what’s left of their lives (not much time!). Facing reality is WHAT WE DO, Michael. You must have some true meathead Boomer contacts.
agree !
Rob Reiner?
Maybe he should change his handle to Michael Stivic?
Aside from some relatively short term Fed monkey business, you can’t inflate away the debt because higher inflation will bring about higher interest rates. I know, I know, we’re the cleanest dirty shirt – the international safe harbor. Until we’re not.
… except for the H1Bs… but I’d be fine with just assigning the whole quota to Tesla. One of these days we need to turn a profit on something besides carbon credits.
Overpriced.
Gravity with Germany and Japan drags the 10Y down.
Normal inflation: 0% to 10%. Elevated inflation: 10% to 20%. High inflation:
20% to 80%. Hyperinflation: 80% and above.
Trump wants inflation and lower Fed rates to ease gov debt. As long as inflation is subdue < 10%-13% ==> go for it.
Apparently you didn’t live through the past 4 years
Inflation always gets out of control. When the currency is not even a trustworthy transitory store of value, misallocation of resources is rife and turmoil abounds. In a hyperinflationary scenario, logic would dictate that people hold tangible assets. In the real world, they have to sell their house to buy food.
The value of home sales multiplied by price are definitely not the lowest. Maybe there is a correlation somewhere there.
I think the assassination attempt changed Trump in many ways as he himself has mentioned. I truly believe there was some divine intervention involved in keeping him here. Trump’s challenge is to accept the divine intervention from God as the gift and responsibility it is…AND accept the additional responsibility to tamp down ego in order to avoid hubris. Demanding interest rates go down is a small example of such thinking IMO.
Thou shalt have no god before me
“High costs related to homeownership sapped sales again. The average rate for a 30-year fixed mortgage has hovered between 6% and 8% since late 2022, making it prohibitively expensive for many Americans to buy homes at current prices, which hit record highs last year.”
The high costs aren’t due to high mortgage rates. Unaffordable housing is the result of the Fed’s asset purchase program that put trillion$ into the hands of wealthy investors to purchase stocks and houses which was incentivized by years of zero interest rates.
Investors are sitting on a staggering $7T in money market funds and slashing interest rates is likely to ratchet up their participation in the housing market offsetting the benefit of lower mortgage rates.
And the idea that cutting interest rates will lower housing costs because it will free up sellers who are locked in with lower rates is absurd as the seller in this case will just become the new demand. It may increase transactions but it is not going lower prices because it isn’t changing the supply/demand dynamic.
Yeah! However, the 50% increase in home insurance over 2 years and the 10%+ per year increase for 20 years in property tax ($5896 in 2004 — $20,000 in 2025) doesnt help either.
No doubt but those are calculated on the value of the house.
Last sentence should have said isn’t improving the supply/demand dynamic as the supply/demand could be changed or made worse by more investors entering the market.
Senators have encouraged the Fed to cut interest rates to lower mortgage rates but it isn’t clear that lowering the FFR would cause a lower ten-year bond yield which is more aligned with mortgage rates. It hasn’t correlated recently with Fed rate cuts as longer-term yields have increased.
Except for a few pockets of the country (that Wolf guy likes to cherry pick those as he did on the 19th) most of the country is seeing rising prices because supply is constrained.
Number of houses sold is down only because supply is constrained. Nobody wants to give up their 3% mortgage unless they have to.
Every existing house, apartment building, stock and bond was already bought up using 0% interest rate money from 2008-2022 by the hedge funds and private equity, and when the rates go back down to zero, it will continue. I get one phone call a week asking if I want to sell my house. You cant sell what isnt available. The mortgage rates will come down along with the 10 year, but until then, there is nothing affordable for sale.
Wife and I half jokingly talk about living in a van down by the river.
so flipping houses no longer is profitable.
You think that is a problem
Many singles nowadays. No partner, no kids. Why to buy a house?
Existing house sales have fallen comparable to the 2005-2008 Housing bubble, without a recession being called. I fully expect even lower annual existing home sales before the bottom of the next recession is in.
Only the rich will have homes Trump ruins summer vacation, and it’s only JanuaryThe Trump Administration’s hiring freeze has caused the National Parks Service to rescind job offers to seasonal employees and put this Summer’s tourist season at risk.
Millions of Americans take to our National Parks each summer. Without proper staff, they’ll be a mess or just closed. The hiring freeze doesn’t just mess up our vacation plans. It also severely impacts the lives of over 7,500 people who rely on them for income.
Constraining spending is harder than increasing it. There’ll be a few bumps along the way. It’s still January. They can tweak the policy in coming months.
Why do serfs think they deserve homes… especially in warm climates? Get back to nature!
The parks could easily be self-sufficient. Entry fees, cabin rentals, equipment rentals. You could also donate to them yourself. I don’t like parks and don’t want to pay for them but if we are going to pay we should each get to choose where we want our non essential taxes to go.
I want my non essential tax dollars going to farming equipment for prisons. Make them all farmers. Your unemployed park workers could then have low cost groceries or even free food.
Free food? Socialism!
It’s “free” in the sense it’s cheaper than illegal aliens. Pay prisoners 1/4 of what illegal alien farmers make. That is a nice bargain and they learn some skills, specifically how to work with others in a civil manner.
Its only a freeze for 90 days until Trumps nominees get confirmed and in place.
Mr. Gold at around $2773/oz this morning continues to point toward more deficits/inflation/trade wars/disorder as a “going concern”. I don’t think this is the sort of “Golden Age” DJT has in mind. .
Just pick up some Melania coin for the grandkids Bill. Don’t be a stick in the mud.
MMMMM… $melania….
Wish we could get back the $200B we sent to that cokehead in the Ukraine.
“Mr. Gold at around $2773/oz this morning continues to point toward more deficits/inflation/trade wars/disorder as a “going concern”. I don’t think this is the sort of “Golden Age” DJT has in mind.”
Someone here was telling me to sell gold in 2019 priced at roughly Cdn $1700. Today gold is currently Cdn $4077.
Inflation is only going to continue to rise under Trumps policies. The Golden Age is indeed going to thrive under DJT.
y = e to the x power, all day long
Rates aren’t too high. Prices are.
Prices won’t be dropping because supply is constrained by all those homeowners who don’t want to give up their 2.75% mortgage rates. There’s a desperation among some buyers to get something – anything – where they can plant themselves to avoid rent increases and as a hedge against inflation – which people rightly intuit will be increasing due to the national debt.
Yes I’d like to move but I cannot afford to. I’m willing to give up my rate.
First time buyers and older downsizers are competing for the same modest houses.
This…I have a 3% from a few years ago and it would take a LOT to even consider selling. Did not “take any money out” for the refi which the sophisticated types tell me we should have done. I figure if thee was another bubble burst in housing that we’d be okay even if prices were somehow to fall back to 2015 levels.
Wolf noted this week that only 55% of mortgages are sub 4% now and dropping.
Only 20% are sub 3%. That’s not a lot of potential supply being held off the market due to low rates. It’s almost reaching ‘myth’ status.
https://wolfstreet.com/2025/01/20/locked-in-homeowners-nevertheless-pay-off-below-4-mortgages-and-their-share-of-all-mortgages-outstanding-drops-to-55-lowest-since-q1-2021/
So the majority of existing mortgages are 3.875% or lower, while current rates are > 7%. You’re making my point.
It’s not just prices. Taxes and insurance are through the roof in the last 4 years even if you can afford to buy.
My taxes/insurance portion of my escrow is now double the mortgage part (1K mortgage, 2K taxes and insurance).
That’s pretty steep. Insurance went up a lot more than is admitted publicly by the I insurers. I used to pay annually, now it’s twice a year. Keeps going up, I’ll be forced to go monthly payments, which sucks because they slap on extra fees for that. Taxes are a pita, too. The rural county where I’m located is turning over rocks to find a reason to tax more. Kinda makes a person want their property to look like it’s out of a sub Saharan warzone to keep it from having taxes to the moon.
You indirectly pay taxes and insurance as a renter, so what? They are nothing compared to mortgage payments.
No Country For Used Houses
Well, prices won’t be dropping anytime soon.