Real Estate Snapshot - Early 2025

The past few years have been a rollercoaster for real estate, and this year is starting with some interesting developments. Let’s dive into what’s happening and what it might mean for you, whether you’re thinking about buying, selling, or just keeping an eye on the market.

The Big Picture: Economy and Interest Rates

First things first, let’s talk about the economy because it sets the stage for everything else. Inflation has been a hot topic, and in January, it rose to 3.0%, which was higher than many expected. This uptick has put the brakes on further cuts to the federal funds rate. The Federal Reserve decided to keep the rate at 4.5% for now, waiting to see if inflation starts to cool down.

Now, you might be wondering, “What does this have to do with mortgage rates?” Well, mortgage rates don’t directly follow the federal funds rate. Instead, they’re more closely tied to the 10-year Treasury yield. In January, that yield was at 4.63%, but the good news is that it’s predicted to drop below 4.0% in the coming months. If that happens, we could see mortgage rates follow suit, which would be great for homebuyers.

Housing Market Slowdown: A Seasonal Norm

January is typically a slower month for housing activity, and this year was no exception. We saw fewer existing home sales and pending sales (those are contracts signed but not yet closed). But don’t let that worry you too much—it’s a seasonal pattern. The Mortgage Bankers Association (MBA) index suggests that things should pick up in the next 6 to 8 weeks as spring approaches. So, if you’re thinking about buying or selling, the market might start to heat up soon.

Prices and Affordability: A Silver Lining

One piece of encouraging news is that the median sales price for homes decreased in January. Combine that with an increase in new listings and a larger inventory of homes for sale, and suddenly, things are looking a bit more affordable for buyers. In fact, the inventory in January was up 16.8% compared to the same time last year, giving buyers more options to choose from. This could be a great opportunity if you’ve been waiting for the right time to jump into the market.

Jobs, Jobs, Jobs: The Labor Market Remains Strong

A strong job market is always good for housing, and the U.S. labor market has been on a roll since 2021. In January 2025, the number of unemployed people decreased, and the unemployment rate has been stable for the past eight months. When people feel secure in their jobs, they’re more likely to consider buying a home. States like Texas, California, and Florida have seen significant job growth, which could drive housing demand in those areas.

New Construction: Building for the Future

On the new construction front, things slowed down a bit in January. Housing starts and building permits both decreased compared to December and the previous year. However, some states are still seeing robust construction activity. South Carolina and Idaho, for example, are leading the way in terms of permits issued per resident. If you’re in an area with a lot of new builds, it might mean more options for buyers in the near future.

What Does This Mean for You?

As always, real estate is local, so conditions can vary depending on where you are. If you’re curious about how these trends are playing out in your area, feel free to reach out. I’m here to help you navigate the market and make informed decisions.

Until next time, happy house hunting!