The current state of the US housing industry is characterized by elevated mortgage rates, rising home prices, and limited inventory levels. As of January 2025, the average 30-year fixed mortgage rate stands at 7.08%, despite three rate cuts from the Fed since September 2024[3]. This has led to concerns about affordability, with experts predicting that mortgage rates will moderate but not decrease substantially in 2025.

Home prices continue to rise, with a 4.7% increase in November 2024 and forecasts predicting a 3.0% average increase for 2025[1]. The National Association of Realtors (NAR) reported a 4.8% year-over-year increase in existing-home sales in November 2024, indicating a slight improvement in the market[3].

However, inventory levels remain a challenge, with a 3.8-month supply at the end of November 2024, below the 5-6 months typically needed for a balanced market[3]. The National Association of Home Builders (NAHB) expects future sales to increase, but notes that high interest rates, elevated construction costs, and a lack of buildable lots continue to act as headwinds[3].

In response to these challenges, industry leaders are focusing on new construction to increase inventory levels. According to Greg McBride, CFA, chief financial analyst for Bankrate, "Mortgage rates won't fall enough to spur an increase in existing-home inventory, with most of the increase in inventory seen in the market coming from new construction"[3].

Consumer behavior is also shifting, with buyers no longer holding out for lower rates. Lawrence Yun, Chief Economist for NAR, notes that "home sales momentum is building" as the economy continues to add jobs and housing inventory grows[3].

Compared to previous reporting, the current conditions indicate a slight improvement in the market, but still a challenging year for buyers and sellers. The complexities of the current conditions emphasize the importance of guidance from experienced local real estate agents.

Key statistics and data from the past week include:

- Average 30-year fixed mortgage rate: 7.08% as of January 8, 2025[3]
- Home price increase: 4.7% in November 2024[1]
- Forecasted home price increase: 3.0% average for 2025[1]
- Existing-home sales increase: 4.8% year-over-year in November 2024[3]
- Inventory levels: 3.8-month supply at the end of November 2024[3]

Overall, the US housing industry is navigating through a period of elevated mortgage rates and limited inventory, but with signs of improvement in sales momentum and new construction. Industry leaders are responding by focusing on new construction and adapting to shifting consumer behavior.

This content was created in partnership and with the help of Artificial Intelligence AI