February 21, 2025
VIDEO TRANSCRIPT:
- I’m Danielle Hale, Chief Economist at Realtor.com®. As winter lingers, I’m going to discuss the latest data on homebuilder confidence and new construction, existing home sales, mortgage rates, and housing inventory, and most importantly–what it means for you. I’ll also highlight how trends in rents are likely influencing decisions about renting versus buying.
- Builder confidence sank in February to a 5-month low. While current sales and traffic readings dipped modestly, the component tracking sales expectations in the next 6 months fell to a 14-month low, likely due to uncertainty about tariffs which pose risks to builder costs.
- In fact, data on residential construction showed that while completions rose, permits were roughly flat and starts fell. This suggests that builders are working to close out existing projects ahead of the uncertainty, and optimistically maintaining their permit pipeline while exercising more caution on starting homes right now.
- One bright spot for hopeful builders, home sellers, and buyers alike, interest rates have largely steadied this week despite last week’s inflation surprise, with the 10-year yield hewing close to 4.5%. As a result, mortgage rates fell modestly for a 5th week. Although mortgage rates have occupied a fairly narrow band since the end of 2024, it’s still a good idea for home shoppers to do some scenario planning, or what I call rate-proofing their home budget as they approach the spring season. Considering how a swing in mortgage rates will affect your home price target and budget, in advance, will help you adjust more nimbly if rates do in fact change during your home search.
- January existing home sales data not only provide our first look at 2025, we also see how more elevated mortgage rates have impacted buyers and sellers. Although sales pulled back from December’s high, they continue to climb from a year ago suggesting that some shoppers have accepted higher rates.
- Realtor.com weekly housing data showed ongoing seller activity, although new listings growth wasn’t quite as robust as last week. Still, the availability of for-sale homes continued to increase, and home listing prices remain steady to slightly lower. Perhaps most helpful for home shoppers, the market is not quite as brisk as one year ago, with typical time on market up by just less than a week.
- Finally, the Realtor.com January Rental Report shows that rent declines moderated as rents stabilized in January. Despite the steadiness, the monthly costs of renting versus buying are still tipped heavily in favor of renting in all but two of the 50 largest metro areas meaning that today’s first-time home shoppers likely have non-financial motivations for deciding to buy.
- 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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