January 31, 2025
VIDEO TRANSCRIPT:
- I’m Danielle Hale, Chief Economist at Realtor.com®. And here’s what you need to know about the economy and housing market this week.
- Taking a look at the big picture, domestically, the U.S. economy grew in the 4th quarter, but at a slower pace than in the third quarter. Although consumers boosted activity, investment was a weak spot.
- As the economy grew, prices picked up, too. As the economy grew, prices picked up, too. In the measure favored by the Fed, overall inflation accelerated, while core prices steadied.
- In January, consumer confidence softened, though it remained within its recent range.
- The Fed met, and decided to leave its policy rate unchanged in January. In the ensuing press conference, Chair Powell called current policy “meaningfully restrictive” and noted that the Committee did not need to hurry to make policy adjustments. Market investors largely expect the Fed to be in its current holding pattern until June.
- Mortgage rates steadied, hovering just below 7% this week, but remain more than 80 basis points above their September low.
- Some home sales data began to show the effects of higher rates. Pending home sales–an early-stage indicator based on contract signings–slipped 5.5% in December and were below year-ago pace. However, new home sales ticked higher.
- The latest Realtor.com New Construction Insights report showed that in the fourth quarter, the median list price of new homes slipped and the price premium for new homes over existing homes shrank.
- Perhaps most interestingly, the report showed that while both new and existing home sellers will occasionally market mortgage rate buydowns to incentivize buyers, the share of new homes with this incentive is nearly four times as large as the share among existing homes. Put simply, if you’re after a seller-funded mortgage rate buydown, you’re more likely to find it in a newly built home.
- Realtor.com January housing data show an active start to the year for sellers with newly listed homes growing by nearly 11% from a year ago. Some of the increase is likely a residual benefit from fall’s lower mortgage rates, that could fade. But drivers such as the need for families to adapt to life changes and the easing of the lock-in effect, are also at play and would mean more lasting improvement.
- Realtor.com weekly data showed that while seller engagement and softer asking prices were observed throughout the month, the gap in time on market shrank in each of the last three weeks.
- Finally, I want to highlight the Winter 2025 Wall Street Journal/Realtor.com Housing Market Ranking. While many of this quarter’s top markets are familiar, including number one Canton, Ohio, the biggest climber into the top was newcomer Trenton-Princeton, New Jersey. Affordability continues to be a theme even among top luxury markets with St. Louis ranking number one in this dimension.
- You can find all the details, including full reports and our housing data for download, at realtor.com/research. You can also follow us on X (formerly twitter) for real time updates. And instagram for graphics.
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