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2025 Could Bring Us Relief in Housing Availability
The 2025 for-sale housing market is anticipated to experience increased rate volatility and affordability challenges, yet a slight rise in inventory. Persistent home price appreciation, limited inventory, and a mortgage lock-in effect, coupled with widespread industry changes, continue to make homeownership unattainable for many.
An uptick in inventory may provide potential relief in 2025. While numerous existing homeowners hold mortgages with 4% or less rates, life events and the growing acceptance that such low rates are unlikely to return soon have begun to unlock supply.
Life events, rather than mortgage rates, remain the primary driver for homeowners to list their properties. As time progresses, these life events will compel homeowners to sell, leading to more listings. Additionally, new construction is contributing to the increase in housing supply.
The inventory of homes in October increased by 8.8% compared to the previous year, equating to a 9.5-month supply at the current construction pace, according to the National Association of Home Builders. This figure exceeds the balanced market benchmark of five to six months' supply.
Furthermore, Realtor.com projects a 11.7% rise in the supply of homes for sale next year. New construction is expected to grow even more, with a 13.8% increase from 2024 to 1.1 million new starts in the upcoming year. Danielle Hale, the chief economist at Realtor.com, stated that inventory will be the most favorable aspect for consumers. While homes may take slightly longer to sell in 2025, this could be beneficial, particularly for first-time homebuyers, as it allows them to deliberate more thoroughly on their purchase decisions.
The supply of homes on the market has reached levels not seen since December 2019, according to Realtor.com, and approximately 20% of listings are now experiencing price reductions.
Despite these developments, a substantial proportion of homeowners, estimated at 84% as of last month by Realtor.com, have a mortgage rate below 6%. Although this figure has decreased from 89% in the second quarter of the current year, it still represents a vast majority of current homeowners.
Home sales will increase by between 2% and 9% next year, culminating in an annualized rate of between 4.1 million and 4.4 million by the end of 2025. (Source: Redfin Corporation)
MORTGAGE RATES
Realtor.com, Redfin, and Zillow are predicting interest rates that fall from 6% to 6.7%. Some are looking for rates to fall from the Trump policies, but I disagree. Current conversations are forecasting that the tax reduction will not hit the books until late 2025 and perhaps early 2026. When it happens, it will take a while for it to trickle down to the retail level to make a difference in home mortgage rates. Even then getting back to the historical mortgage rates at 4% or below is in the past, at least for years to come. It will more likely see lower rates leveling off at around 5.5%.
If you’re thinking about a change in a house you can call home, the positivity meter ticked up a notch. Those of us already in a home and plan to stay it will continue to help your investment portfolio totals.
COL Randall C. @Lt Col Charlie Lt Col Charlie Brown MAJ Dale E. Wilson, Ph.D. CW3 John Wescott SGM Erik Marquez CSM Charles Hayden MSgt Dale Johnson SFC Jo Ann Klawitter Cpl Vic Burk SPC Michael Duricko, Ph.D
The 2025 for-sale housing market is anticipated to experience increased rate volatility and affordability challenges, yet a slight rise in inventory. Persistent home price appreciation, limited inventory, and a mortgage lock-in effect, coupled with widespread industry changes, continue to make homeownership unattainable for many.
An uptick in inventory may provide potential relief in 2025. While numerous existing homeowners hold mortgages with 4% or less rates, life events and the growing acceptance that such low rates are unlikely to return soon have begun to unlock supply.
Life events, rather than mortgage rates, remain the primary driver for homeowners to list their properties. As time progresses, these life events will compel homeowners to sell, leading to more listings. Additionally, new construction is contributing to the increase in housing supply.
The inventory of homes in October increased by 8.8% compared to the previous year, equating to a 9.5-month supply at the current construction pace, according to the National Association of Home Builders. This figure exceeds the balanced market benchmark of five to six months' supply.
Furthermore, Realtor.com projects a 11.7% rise in the supply of homes for sale next year. New construction is expected to grow even more, with a 13.8% increase from 2024 to 1.1 million new starts in the upcoming year. Danielle Hale, the chief economist at Realtor.com, stated that inventory will be the most favorable aspect for consumers. While homes may take slightly longer to sell in 2025, this could be beneficial, particularly for first-time homebuyers, as it allows them to deliberate more thoroughly on their purchase decisions.
The supply of homes on the market has reached levels not seen since December 2019, according to Realtor.com, and approximately 20% of listings are now experiencing price reductions.
Despite these developments, a substantial proportion of homeowners, estimated at 84% as of last month by Realtor.com, have a mortgage rate below 6%. Although this figure has decreased from 89% in the second quarter of the current year, it still represents a vast majority of current homeowners.
Home sales will increase by between 2% and 9% next year, culminating in an annualized rate of between 4.1 million and 4.4 million by the end of 2025. (Source: Redfin Corporation)
MORTGAGE RATES
Realtor.com, Redfin, and Zillow are predicting interest rates that fall from 6% to 6.7%. Some are looking for rates to fall from the Trump policies, but I disagree. Current conversations are forecasting that the tax reduction will not hit the books until late 2025 and perhaps early 2026. When it happens, it will take a while for it to trickle down to the retail level to make a difference in home mortgage rates. Even then getting back to the historical mortgage rates at 4% or below is in the past, at least for years to come. It will more likely see lower rates leveling off at around 5.5%.
If you’re thinking about a change in a house you can call home, the positivity meter ticked up a notch. Those of us already in a home and plan to stay it will continue to help your investment portfolio totals.
COL Randall C. @Lt Col Charlie Lt Col Charlie Brown MAJ Dale E. Wilson, Ph.D. CW3 John Wescott SGM Erik Marquez CSM Charles Hayden MSgt Dale Johnson SFC Jo Ann Klawitter Cpl Vic Burk SPC Michael Duricko, Ph.D
Posted in these groups: 
BudgetUnited States Department of the Treasury: Bureau of Public Debt
Housing
BudgetUnited States Department of the Treasury: Bureau of Public Debt Housing
Posted 14 d ago
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