New listings increased by 8 percent towards the end of the year, however, high mortgage rates and home prices have deterred buyers from actively participating in the market, leading to homes spending more time listed, according to reports.
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New listings rose 8 percent towards the end of 2024, while high prices and mortgage rates created a barrier for homebuyer demand, as indicated in a recent report by Redfin.
With rates around 7 percent, demand was subdued, leading to a decline in both pending home sales and mortgage purchase applications, according to the report revealed on Friday morning.
Mortgage purchase applications saw a decrease of 17 percent compared to the previous year, based on a weekly survey conducted by the Mortgage Bankers Association.
Redfin reported that the number of active listings was 9.7 percent higher than the previous year, resulting in a more balanced market with 4.2 months of housing supply available.
Homebuyer demand also witnessed a 1 percent decrease from the previous year, based on Redfin’s Homebuyer Demand Index, which tracks activities such as tours and other homebuying services requested from Redfin agents.
Median sales prices saw a 6.4 percent increase in the four weeks leading up to Dec. 29, reaching $383,750, marking the largest surge since October 2022, Redfin reported.
The daily average 30-year mortgage rate stood at 7.07 percent, up from 6.7 percent in the previous year.
A report released on Thursday by Realtor.com economists attributed the market slowdown to the rise in mortgage rates between November and December.
“Although current rates are substantially higher compared to a few months ago, our forecast for 2025 indicates that as rates decrease and time diminishes the ‘lock-in’ effect that impacted sales this year, we can expect a modest increase of 1.5 percent in home sales in 2025,” Realtor.com mentioned in their report.
Both reports highlight that homes are spending more time on the market compared to the previous year, yet still below levels seen before the pandemic.
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