2024 Real Estate Wrap-Up and What to Expect in 2025

The 2024 housing market presented a challenging yet transformative year. High mortgage rates, record-breaking home prices, and fluctuating inventory levels defined the landscape, shaping a market that required buyers, sellers, and investors to navigate carefully. As we prepare for 2025, understanding this year’s key trends and projecting their influence into the future is essential for making informed decisions.

2024: A Year of Highs and Lows

Record-Breaking Home Prices and Elevated Mortgage Rates  

In 2024, mortgage rates averaged 6.73%, marking a 20-year high. This increase significantly impacted affordability, pricing many buyers out of the market. In June, the median home price reached an all-time high of $426,900 before experiencing a seasonal decline to $400,000 by year-end. The drop aligns with traditional patterns but underscores the affordability challenges that defined the year.  

For buyers, the high rates translated into the highest monthly mortgage payments in history. Combined with elevated home prices, the situation created a perfect storm, leading to lower sales volumes compared to previous years.

Shifting Inventory Trends  

The inventory shortage eased slightly in 2024, thanks to increased listings during the year. However, the current inventory levels remain below pre-pandemic norms. While more homes on the market provided opportunities, the elevated rates and prices tempered demand.  

Economic Resilience Amidst Market Challenges 

Despite the housing market’s struggles, the broader U.S. economy performed exceptionally well in 2024. Metrics like strong job growth, low unemployment, reduced inflation, and positive real GDP painted a picture of economic resilience. The Federal Reserve's high interest rate strategy successfully curbed inflation without causing a significant economic slowdown.  

However, looking ahead, the incoming Trump administration’s proposed economic policies could create new challenges. Planned tariffs on imports from major trade partners such as China, Mexico, and Canada are expected to raise the cost of goods, potentially spurring inflation and affecting sectors like agriculture, construction, and manufacturing.  

2025 Market Outlook: Anticipated Challenges and Opportunities  

Rising Costs and Labor Shortages  

Tariffs could drive up the cost of goods and materials, including fresh produce and construction supplies. Higher costs and potential labor shortages in agriculture and construction might delay new developments and increase housing prices for new builds.  

Stabilized Mortgage Rates with Limited Buyer Demand 

We expect mortgage rates to stabilize around 6.5%, which is still significantly higher than pre-pandemic levels. This will continue to impact affordability, limiting buyer activity in 2025. Monthly payments at this rate are approximately 32% higher than at 4%, reducing market participation.  

Balanced Home Prices with Slower Growth  

Broadly, home prices are projected to stabilize with slower price growth compared to the past four years. However, regional variations will remain prominent, with localized markets experiencing unique trends based on inventory, demand, and economic factors.  

Preparing for the Year Ahead  

As we move into 2025, the real estate market is poised for a year of stability with slower growth and affordability challenges. The economic policies of the new administration, combined with potential cost increases and labor shortages, will undoubtedly influence the market. However, opportunities will still exist for buyers and sellers who remain flexible and informed.  

Whether you’re looking to buy, sell, or invest, staying ahead of market trends and working with experienced real estate professionals will be key to achieving your goals in this evolving landscape.