Real Estate Market Update

Welcome to my last market update of 2024!

The Federal Reserve made another quarter-point cut in December in an effort to keep the seemingly steady yet cooling economy stable. This is the Fed’s third cut of the year and mortgage interest rates are still up near 7%.

Despite stubborn mortgage rates, home sale activity continues to improve, and home builders are confident about the 2025 new construction market. Some experts predict 2025 to be a “bumpy” year for the real estate market, but one where buyers ultimately come out ahead.

Want the latest real estate news? Here’s the housing market update for December 2024!

December Housing Market Trends

Home sale activity is up, and builders are feeling optimistic about 2025.

Existing Homes

Home sales momentum is building! In November, existing-home sales increased 6.1% from a year ago, according to the National Association of Realtors (NAR). This is the largest yearly gain since June 2021.

“More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6% and 7%,” said NAR Chief Economist Lawrence Yun.

In November, the median existing-home sales price rose 4.7% from November 2023 to $406,100—the 17th consecutive month of year-over-year price gains.

New Construction Homes

Although there are concerns about higher interest rates, elevated building costs, and a lack of buildable lots, there are signs of builder optimism for 2025!

According to the National Association of Home Builders (NAHB), future sales expectations have increased to a nearly three-year high thanks to anticipated future regulatory relief in the aftermath of the election.

In November, the NAHB reported an increase of 6.4% in single-family starts. Single-family construction is up 7.2% on a year-to-date basis. However, single-family permits remained flat as builders face mixed market conditions, but we should see some improvements in 2025.

Housing Inventory

Housing inventory decreased in November as many would-be home sellers held off on listing their homes on the market until after the holidays. We should see more of an increase as we get closer to spring.

The inventory of unsold existing homes fell 2.9% in November to 3.8 months’ supply at the current sales pace. However, this is still a 17.7% increase from a year ago. 

Mortgage Rates

As of December 26, the 30-year fixed-rate mortgage was 6.85%, according to Freddie Mac’s Primary Mortgage Market Survey.

This is the second week straight for mortgage rate increases. Freddie Mac noted that there was a slight improvement in new and existing home sales, but the market is still experiencing an overwhelming undersupply of homes.

While we likely won’t see a sudden jump in inventory, a strong economy can potentially help boost purchase activity in the new year.

DC Area Housing Market Update

In the D.C. housing market, we’ve seen some positive indicators!

In November, sales grew 10.8%, total volume is up by 19.1% over the past year, buyer interest has increased, and the median sold price was $699,900—an increase of 6.6% from November 2023 but down from October 2024, according to the Northern Virginia Association of Realtors (NVAR) November 2024 market statistics report.

“By all accounts, November was a healthier real estate market compared to a year ago. We have slightly more inventory, which helps buyers. The appetite for homeownership is strong so even with more homes on the market, homes are selling well, which in turn is driving prices up from a year ago,” said NVAR Board Member Arshia Kia.

Is Now a Good Time to Sell?

The holiday season is notoriously slow in real estate, but that doesn’t mean you should wait until spring to sell your home.

Historically, the number of homes for sale typically declines during the winter months, and buyers have fewer options to choose from. As more sellers jump into the market closer to spring, inventory starts to climb again.

According to Keeping Current Matters, selling during this “winter sweet spot” gives your home a better chance of standing out. Another perk of selling during the winter is that buyers who are looking right now are serious about making a move.

The “window shoppers” are usually busier at this time of the year or avoid going out in colder weather. This means that the buyers who are out are motivated, usually because of a job relocation, lease ending, or another time-sensitive reason.

So if you’re thinking of selling, don’t wait! You’ll see less competition—giving your home a chance to shine.

It Pays to Be a Homeowner

Renters have less than 3% of the wealth of homeowners, with a median net worth of $10,400 versus $400,000 for homeowners, according to a recent report by the Aspen Institute Financial Security Program (Aspen Institute FSP).

Homeownership is often seen as the primary way to build wealth in the U.S., yet over one-third of households are currently renters, and that number is expected to rise.

While purchasing a home isn’t always as affordable as renting, it allows you to build wealth over the long term. Home equity is one of a homeowner's most valuable tools, allowing you to borrow money at a lower interest rate or build financial stability.

Every mortgage payment you make contributes to your stake in the property, unlike rent payments which only go toward the landlord’s investment.

There are other advantages as well, like tax write-offs, more freedom, appreciation, and more!

Final Thoughts

As we head into 2025, buyers could get a bit more room to breathe.

Zillow’s annual housing market forecast noted that sellers have had the upper hand for years now, but rising inventory is steadily increasing the amount of leverage for buyers. This is a trend that may continue in 2025, but Zillow projects a “bumpy” year for housing, but one that could result in buyers coming out ahead.

Home values are expected to grow at a more modest rate, and mortgage rates are expected to ease but still remain volatile.

“Buying a home in 2024 was surprisingly competitive given how high the affordability hurdle became,’’ says Zillow chief economist Skylar Olsen. “More inventory should shake loose in 2025, giving buyers a bit more room to breathe.”

Looking to buy or sell in the DC area? Don’t navigate the complexities of the current housing market alone! Reach out today for expert real estate leadership.