More homes were available for sale in the United States last month than in the same period last year, but fewer buyers are showing interest amid high costs, according to real estate brokerage Redfin.
New listings, up 4.7 percent on an annual basis, hit the highest level since July 2022. Meanwhile, pending home sales crashed 6.3 percent year-over-year, signaling dampening demand. Pending sales hit “the lowest level on record aside from the start of the pandemic.” Redfin stated.
Even though a “lot more” inventory is coming into the market than in past years, “it’s not nearly enough,” said Charles Wheeler, a Redfin Premier real estate agent in San Diego.
“Economic fears have been top of mind for people. I have sellers saying, ‘I think we’re at the top of the market—I’m ready to cash out and put my money into another investment,’” he said.
“Buyers should know that they have a bit more negotiating power because there are more homes hitting the market. Sellers should know that since buyers have more negotiating power, they should make sure their home is polished and competitively priced if they want to sell it quickly.”
According to Redfin, housing supply is increasing partly due to fading mortgage rate “lock-in” effect, which refers to homeowners opting not to sell as they carry a lower mortgage rate on these properties. Selling now could mean buying at higher mortgage rates, thereby shouldering an additional financial burden.
In addition, homes are lingering on the market for longer, with a typical home sold in January sitting on the market for 56 days, a week longer than a year back.
The brokerage attributes the decrease in housing sales to various reasons, including elevated interest rates and economic uncertainty.
The average interest rate on a 30-year fixed mortgage in January was 6.96 percent, the “highest level since May.” The median home price rose 4.1 percent on an annual basis to $418,581, which was “45 percent higher than the January before the pandemic.”
Meanwhile, factors such as potential tariffs and a reduction in the federal workforce are contributing to economic uncertainty.
“I’ve met with a lot of potential sellers over the last few weeks. Listings typically pick up in March or April, but this year it’s happening earlier,” said Fernanda Kriese, a Redfin Premier agent in Las Vegas.
“Some of the sellers are listing because they bought just a few years ago and their home value isn’t increasing as quickly as they’d like, so they’re cutting their losses and moving to a less expensive home. Some are retirees who are downsizing.”
Market Sentiment
According to a Jan. 23 market survey by real estate data company Bright MLS, while optimism for buyer activity rose last month, the sentiment “isn’t as high as it was last year at this time.”Even though the U.S. Federal Reserve cut rates in December 2024, mortgage rates moved higher. As a result of the rates remaining stubbornly elevated, expectations for the early 2025 housing market have been “tempered.”
“Buyers will start to have more leverage in 2025, but compromise is the path forward for the market,” the company said.
“In December, 36 percent of agents working with a successful buyer stated their buyers had to make some type of compromise, whether that was accepting the home as-is, offering above list price, or purchasing a smaller home.”
“President Trump understands that America is facing a housing affordability crisis and the only way out of this crisis is to remove barriers like unnecessary and costly regulations that are raising housing costs and preventing builders from building more attainable, affordable housing,” Harris said.
