Navigating High Rates and Rising Supply

As of January 2025, the U.S. housing market is experiencing notable trends that potential buyers and investors should consider. Mortgage Rates and Affordability Mortgage rates have remained relatively high, with economists predicting they will stay above 6% throughout 2025. This trend continues to impact housing affordability, as higher rates increase monthly payments for homebuyers. Housing Supply and Demand The housing supply has reached a four-year high, partly because many homes are lingering on the market unsold. Over half of home listings last month sat on the market for 60 days or longer—the highest November share since 2019. This increase in supply provides more options for buyers but also indicates a potential slowdown in demand. Market Predictions Looking ahead, Redfin’s 2025 predictions suggest that pent-up demand will lead to more home sales, with an expected year-over-year increase of between 2% and 9%. However, high housing costs may price out some would-be buyers, and low inventory could continue as homeowners hang onto their properties. Considerations for Buyers and Investors Given these dynamics, it’s essential for buyers and investors to:

• Monitor Interest Rates: Stay informed about mortgage rate trends, as they directly affect purchasing power and investment returns.
• Assess Market Conditions: Evaluate local market conditions, including housing supply and demand, to make informed decisions.
• Plan for Affordability: Consider long-term affordability, especially in the context of potential economic policies that could influence the housing market.

Staying updated on these factors will be crucial for navigating the housing market in 2025.