According to Redfin, December’s year-over-year increase was the smallest year-over-year increase since 2015 and the second-smallest since 2013. Redfin senior economist Sheharyar Bokhari believes prices will continue to rise into 2025, a view expressed by many observers the sector is shared.
“Prices will continue to rise consistently as it is unlikely there will be enough new inventory to meet buyer demand,” Bokhari said in the report. “We expect there will be slightly more sales this year, largely due to pent-up demand, but there will not be enough of an increase in listing activity to put significant downward pressure on prices.”
The metro-level data tells a slightly different story. Redfin reported that 15 of the country’s 50 most populous metropolitan areas recorded seasonally adjusted declines in home prices from November to December. The sharpest decline occurred in Tampa, Florida, where home prices fell 1.3%. It was followed by Atlanta (-0.9%) and Miami (-0.7%). Conversely, the highest gains during the month occurred in Pittsburgh (+1.9%), Cleveland (+1.5%) and St. Louis (+1.3%).
Nassau County, New York, saw a 14.63% increase in the past year, leading all metro areas in home price growth. Detroit came in second with year-over-year growth of 13.32%.
Across the housing sector, other data providers saw price growth late last year. Fannie MaeThe company’s latest HPI report highlighted a 1.7% quarter-over-quarter increase in home prices in the fourth quarter of 2024. Fannie Mae’s index showed prices rising between the fourth quarter of 2023 and the fourth quarter of 2024 rose by 5.8%.
House sales also took a hit due to high prices. Recent data from Alto’s research found that buyer activity decreased when mortgage rates reached 7%.
“Buyer activity has been declining for several weeks and there are fewer homes under contract now than a year ago. Both weekly new contracts and all homes in the contract-pending phase are below last year’s levels,” said Mike Simonsen, founder of Altos Research, in the report.
According to HousingWireAccording to the Mortgage Rates Center, interest rates are well above 7%, so sales are unlikely to turn a dime. HousingWire’s 2025 market forecast predicts 5% growth in existing home sales this year and a “slight easing” of mortgage rates.
The forecasts for house prices are slightly more optimistic. HousingWire predicts that appreciation will “slow, but not become negative, in 2025,” rising 3.5% over the year. Real estate portal Zillow predicts house price growth of 2.2% in 2025, in addition to 100,000 additional house sales. Meanwhile, Fannie Mae’s forecast for 2025 predicts conditions won’t be much different from 2024.
