If affordability continues to deteriorate, inventory build-up will accelerate. The 2025 lines will be higher, even closer to old normal levels.
New listings are increasing
There were 53,000 new listings unsold this week. That’s 9% more unsold new listings than the same week a year ago. This level of new listings will lead to inventory growth. If we add the 7,800 direct sales of new listings, that is 4.7% more sellers than a year ago.
In the graph, 5% more sellers than a year ago are within the range we want to see. The red line is right at the level of pre-pandemic sellers. It is healthy for the housing market to have slightly more sellers than in recent years.
This is the holiday week, so we will have a big dip in new offerings this coming week.
The conclusion from the new advertising data is that we are hopeful. If the market is to grow in 2025, this data will need to produce 5-10% more sellers every week than we have had in recent years.
Home sales at an average pace
There were 56,000 new contracts pending last week, which was a pretty good figure for mid-November. That was 6% more new contracts than a week ago and also 6% more than a year ago.
An average of 56,000 new contracts are received every week for single-family homes. Here we look at the average pace of house sales. The homes that are starting a contract now will largely close in December and January. We recently heard that NAR announced that sales increased in October compared to last year. We can see that every week in the Altos data.
The conclusion about house sales is that we are finally counting slightly more house sale transactions than last year. I expect that growth to continue in 2025, but it is not much growth. We predict 4.2 million home sales in 2025, up from 4 million in 2024. We’ll see that trend every week in this chart. If the trend is down, we will revise our forecast lower. Stay informed.
House prices are rising
Despite the affordability crisis, we measured an increase in home purchase prices this week. The median price of new home sales was $385,000, which is an increase of 1.3% from a week ago and an average of 5% more than last year. Even with a mortgage interest rate of 7% and the highest mortgage payment ever, house prices have not fallen nationally.
House prices are holding up better than expected, while demand was weak earlier this year. We measure sales prices — before the sale takes place. This is the price people buy. Asking prices are also higher than last year. The average price of all homes this week is $429,900, which is 1% higher than last year.
The average price of new listings for the week was $397,000. The price of the new offers is on average about 3% higher than last year.
It’s hard to imagine scenarios where house prices rise dramatically next year unless there is a crisis that sends mortgage rates down to the low 5s. In the HousingWire forecast document, we published several scenarios in which house prices could fall nationwide in 2025. We examine these scenarios and identify data you can look at to know if any of these home price correction scenarios are underway. Affordability is a legitimate reason to believe that house prices may fall next year.
Price reductions are increasing
Some data looks to the future for price trends, and if we look there we may see a signal that prices are softening due to recently increased mortgage rates. The percentage of homes on the market with price reductions increased this week to 39.1%. It seems likely that there are sellers who didn’t quite close the deal in October. Now, after the elections, mortgage rates have risen again, meaning that those homes did not receive any offers.
If your home is listed and the market has cooled after the election, you have two options: you can withdraw and try again in the spring, or you can lower your asking price. It seems some are lowering their asking prices.
In each of the past two years, late November has been the peak of mortgage rates and the peak of price cuts. It’s the holidays, so homes with no offers are typically removed from the list so they can try again after the new year.
In the Alts We look back at more than 90 days of data to measure price reductions. Most MLSs allow you to withdraw for 30 days and relist as a new listing. Altos keeps track of these relists. If a house is foreclosed on Thanksgiving and relisted at a lower price in January, we see that in January and track it as a price reduction.
Mike Simonsen is the founder of Altos Research.
