Key Themes:
Shifting Housing Market: A noticeable shift in the housing market is underway, transitioning away from a strong seller's market to one that is more balanced, potentially favoring buyers in 2025.
Mortgage Rate Impact: While mortgage rates remain elevated near 7%, experts observe that buyers have adjusted their expectations and are re-entering the market.
Inventory Dynamics: Inventory is rising, providing more choices for buyers, but a significant portion of this inventory is considered "stale," remaining unsold for extended periods.
NAR Under Scrutiny: The National Association of REALTORS® (NAR) continues to face legal challenges and scrutiny over its membership practices and access to the MLS. This is leading to potential membership declines and industry-wide changes.
Placemaking Initiatives: Local REALTOR® boards are leveraging NAR Placemaking Grants to enhance communities, highlighting the positive impact REALTORS® can have beyond transactions.
Key Data Points:
Pending home sales surged to a 21-month high in November 2024. (NAR)
Existing home sales increased 5% annually in November 2024. (NAR)
Median home price rose 4.7% year-over-year. (NAR)
The number of existing homes on the market is up nearly 18% from a year ago. (NAR)
Mortgage rates hovered around 6.91% for a 30-year fixed-rate mortgage in the first week of January 2025. (Freddie Mac)
NAR membership dipped below 1.5 million in January 2025. (Real Estate News)
Important Insights:
Buyer Behavior Shift: "Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory," says NAR Chief Economist Lawrence Yun. This suggests buyers are no longer waiting for substantial rate drops.
Stale Inventory Challenge: Over 54.5% of home listings in November 2024 were on the market for 60 days or more, the highest since 2019. This indicates that sellers might need to reconsider pricing strategies. Redfin Premier agent Meme Loggins notes, "Homes that are priced well and in good condition are flying off the market in three to five days, but homes that are overpriced can sit for over three months."
NAR's Future Uncertain: Ongoing legal battles and the potential for local associations to grant MLS access to non-REALTORS® could significantly impact NAR's membership numbers and influence in the industry.
Sustainability and Modular Construction: Developers are increasingly turning to modular construction for its sustainability and resilience benefits. This trend is driven in part by the availability of "green" financing for such projects.
Placemaking as a Positive Force: Examples like the Long Island Board of REALTORS® using NAR grants to create community amenities demonstrate the organization's commitment to enhancing neighborhoods.
2025 Housing Market Outlook:
Modest Sales Growth: Most experts predict a modest increase in home sales in 2025, but a significant surge is unlikely given continued affordability challenges.
Potential Rate Decline: A gradual decline in mortgage rates is anticipated, with forecasts ranging from 6% to 6.65% for the first quarter of 2025.
Inventory to Remain Elevated: Inventory levels are expected to stay above historical lows, offering buyers more options but potentially limiting substantial price appreciation.
Key Actions for Real Estate Professionals:
Educate Clients on Market Dynamics: Clearly communicate the shifting market conditions to both buyers and sellers, helping them manage expectations and make informed decisions.
Pricing Strategy Crucial: Advise sellers to price homes competitively to avoid becoming part of the "stale" inventory problem.
Leverage Technology and Sustainability: Embrace innovative building practices and technologies, such as modular construction, to attract buyers and explore alternative financing options.
Highlight Community Engagement: Showcase efforts to improve local communities through initiatives like placemaking, strengthening the REALTOR® brand and building trust.
