Shall we see house prices falling in 2025?

We recently shared that the inventory of unsold houses is growing. In recent weeks, housing sales also falter in light of 7% mortgage interest. Now we notice some signals in the data that national house prices can become negative this spring, which shows the home price on an annual basis for the first time since the beginning of 2023.

There are already many markets nationwide where the inventory of unsold houses has been built up in recent years and house prices have been stopped. But house prices are still higher year after year, and some places such as the state of New York had considerable profits from the home prize in 2024 due to persistent tight inventory.

Today the weekly Altos Research-Racked Active Market -Data display signals for this spring that more markets mitigate and become less higher. That is why the average price growth throughout the country can become negative compared to a year earlier.

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There are many ways to measure house prices and more signals about future selling prices. I think it is important to note that almost all of these statistics have shown flatter home prize appreciation. After a small eruption in force a few months ago, many of the home price statistics are gradually flattened from a year earlier. Now some of them are sliding under the year before, which is powered by ruthless high mortgage interest rate.

Let’s look at the data for the third week of January 2025.

House prices have fallen

The median prize of all houses in the US this week is $ 421,000. If you want to buy a house, this is what is available. What is remarkable is that this home price statistics is now 0.7% under the same time last year. It is important to note how unusual this is in the long term.

This is a signal from national house prices that fall compared to last year. This market stands still as long as the mortgage interest rate is more than 7%. We see it in demand for houses and delivery growth, and we also see the impact of higher mortgage interest on house prices.

At the end of January every year you can see all the process that house prices for the entire year will last. In 2022 it was the end of the post-Pandemic tree and buyers hurried to get a house before the mortgage interest was, so there was a steep price rating in the first half of the year. House prices rose weekly and were 10% to 15% more expensive than the year before.

In 2023 the spring slope was much less steep. After this, 2024 started slightly higher. But by June the prices for the year peaked while they remained under the peak of June 2022.

In 2025 the price valuation curve is even flatter. Although the best new inventory comes on the market every week, these are fractionally cheaper priced than last year. Home Sellers and Listing Agents know where the demand for houses is. They also understand the affordability driver with which buyers are confronted and that is why they praise the entries slightly lower than last year.

In the meantime, the median prize of the new contracts came within $ 384,700 in anticipation of this week, which was a small leap compared to last week. The median price that was paid for new hanging home sales is on average only 2% more than a year ago. This measure still shows hardly any positive profits from the home prize, while the active entries are negative.

Keep in mind that not all measures for Home Prize are negative. Some still show positive changes in the home price compared to last year. There is nothing in the house price data of January to show any growing momentum. It is negative.

Here is a light point-2025 is the third year of Flattish home price changes. In recent years – and hopefully in the coming years – incomes climb faster than house prices. When that happens, affordability improves. This market slowly improves affordability throughout the country. At a certain point in the future, the costs of money will fall, and that will be a dramatic advantage for affordability.

Price reductions are more common

Let us use the percentage of houses on the market with price reductions as an indicator for future selling prices. At present, 33% of the active entries have taken a price reduction of the original catalog price. At the moment last year it was 31%. More sellers are confronted with an absence of the buyer’s demand, which reduces their asking price.

In 2023 this number was 33.9%. The weakest price moment of the past three years was the fourth quarter of 2022. By January 2023 the price reductions were still increased. But at that time we were surprised how quickly the market recovered. It fell by 80 or 90 basic points (BPS) per week compared to 50 BPS now.

By the end of February we have the most price reductions of every February in many years.

These are houses that are now on the market, without offers. They take a price reduction and hopefully get an offer in February. That deal closes in March and in April you should hear the headlines that reflect the weakness that we can see in the active market data.

And when we look at the delivery data, the delivery of active inventory continues to grow. That says that these price trends are ready to continue.

New entries have risen from last week

On the supply side there were 51,000 unsold new entries this week. That is currently 13% more than last year. There were 4% more sellers, including the immediate sales. That growing delivery pattern is healthy if we also have more buyers. But with high costs and no signs of decline, buyers are waiting.

We also finally return to normal levels of sellers and unsold inventory after the pandemic. We want to see this curve grow every week against the peak in June. I do not expect that this year we will see 100,000 new offers in a certain week, as we did in the previous decade, but we can touch 80,000.

More sellers means more selection for buyers. It also means less upward pressure on house prices, which we now see. More sellers imply improvement of affordability – especially over time.

Inventaris climbs for the third consecutive week

637,000 single -family homes have now not been sold on the market, an increase of 0.7% compared to last week and 26.5% more than a year ago. This year we may already be past the low stock point for the year. Weeks ago we had 624,000 houses on the market. We are now at 637,000.

Most years experience a few weeks with less inventory before the spring season really starts in February. So far we have only had weeks this year. That is, inventory builds earlier in the season. This is a function of slightly more sellers and even fewer buyers. Home buyers are waiting.

In anticipation of the sale of houses, stagnation continues to stagnate

Although the fourth quarter showed the improvement of the sales volume, this sales profit disappeared in December. There were 52,000 new contracts this week. Last year, 56,000 turnover started in the same week of January. That is 7% less sales compared to last year.

There are 266,000 single -family homes in the contract in anticipation of phase, which is 3.5% less than last year. Last week, sales fell by 2%year after year. The data for apartments is even weaker.

Our immediate demand meter was 7% less than last year, and in recent weeks we have an average of 9% less sales.

In the fourth quarter, sales came above the year before. Mortgage interest rates in December by more than 7%, so we now see the delay in the buyer’s demand. We see it in prices and weekly offers.

Mike Simonsen is the founder of Altos Research and will be a highlighted speaker at the Housing Economic Top In Dallas on 26 February. More information here.

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