Real Estate Market Update

The presidential election is finally in the rearview mirror. 

Now that there’s no more uncertainty surrounding proposed policy changes, economists have shared their views and market expectations for 2025 and beyond.

Economists predict a sluggish economy in general, but we could see increased market activity and a deceleration in home price growth.

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

November Housing Market Trends

The worst of the home sale decline is over, and more inventory has led to more transactions. Mortgage rates are higher than we’d like to see, but experts still predict rates to gradually ease.

Existing Homes

In October, the median existing-home sales price grew 4% to $407,200 – the 16th consecutive month of yearly price gains, according to the National Association of Realtors (NAR).

Sales also improved by 3.4% that month in all four major U.S. regions. This is also a 2.9% increase from a year ago and the first year-over-year increase in more than three years.

"The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” said NAR Chief Economist Lawrence Yun. "Additional job gains and continued economic growth appear assured, resulting in growing housing demand.

New Construction Homes

While existing home sales saw an improvement, new construction sales declined amid rising mortgage rates.

Sales of newly built, single-family homes in October fell 17.3%, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales is down 9.4% from a year earlier, but October new home sales are up 2.1%.

According to the National Association of Home Builders (NAHB), the median new home sale price in October rose 2.5% to $437,300 and 4.7% from a year ago.

Housing Inventory

Inventory continues to climb!

Total housing inventory is up 19.1% from a year ago, NAR reported. Unsold inventory sits at a 4.2-month supply at the current sales pace. While this is a slight decrease from September, it’s up from 3.6 months in October 2023.

New home inventory is also up by 8.8% compared to last year, according to the NAHB. Complete, ready-to-occupy inventory is up 52.6% year over year.

Mortgage Rates

Mortgage rates have come back up and continue to approach 7%. According to Freddie Mac’s Primary Mortgage Market Survey, the interest rate on a 30-year fixed-rate mortgage is 6.81%, which is also the four-week average.

The Federal Reserve has cut benchmark interest rates by 75 basis points since September, but borrowers haven’t felt the effect of these cuts. In fact, rates have steadily increased.

Mortgage rates often move with the Fed’s benchmark rate, but they’re actually tied to 10-year Treasury bond yields. These yields usually rise when investors expect stronger economic growth and higher inflation, even if the Fed cuts the federal funds rate.

DC Housing Market Update

In the D.C. housing market, we’re starting to see more listings hit the market! More homes mean buyers have more options to choose from. Although homes aren’t selling as quickly as before, there’s still enough demand to keep home prices rising.

According to the Northern Virginia Association of Realtors (NVAR) October 2024 market statistics report, the median sold price home that month was $715,000, up 6.7% from a year ago but down from September’s $725,000.

Falls Church (22.2%), Arlington (17.5%), and Fairfax County (12.7%) saw home sales increase, and total sale volume jumped 21% from last year. The month’s supply of inventory was 1.4 months, slightly higher than the five-year average of 1.3 months.

This isn’t the only good news for the DC region.

Bloomberg recently named Arlington County, Virginia, the safest place in America, with Loudoun, VA, in second place. Arlington is less hazardous for drivers, pedestrians, and bikers, and crime rates are also very low compared to other areas across the country.

While the article noted that it can’t absolutely guarantee that it’s the safest county in America, it comes very close.

Where Economists Think the Housing Market Is Headed

There’s no doubt that the housing market has changed substantially over the last five years.

According to NAR’s 2024 Profile of Home Buyers and Sellers report, the median buyer age increased to a peak of 56 years old, and first-time home buyers decreased to 24% of the market share. This marks the lowest share since NAR began collecting data in 1981.

The typical age of home sellers was 65 this year, another NAR record.

“First-time buyers face high home prices, high mortgage interest rates, and limited inventory, making them a decade older with significantly higher incomes than previous generations of buyers,” said Jessica Lautz, NAR deputy chief economist and vice president of research.

Sellers are definitely doing better in this market.

“Meanwhile, current homeowners can more easily make housing trades using built-up housing equity for cash purchases or large down payments on dream homes,” Lautz added.

But here’s what economists have to say about what potentially lies ahead.

The Mortgage Bankers Association (MBA) recently released its macroeconomic forecast, predicting a slugging economy over the next few years. The MBA also revised its mortgage rate forecast and expects rates to range between 6.4% and 6.6% in 2025, while holding steady at 6.3% in 2026. 

Fannie Mae also revised its expectations. Previously, it projected rates to fall below 6%, but now expects rates at 6.3% in 2025 and above 6% in 2026.

Why the change? Tariffs.

Since Donald Trump's presidential election win, economists now widely believe that tariffs of this magnitude could reignite inflation and force the Fed to either pause rate cuts or even raise them, HousingWire reported.

But there’s still good news.

Yun forecasts that existing home sales will rise 9% in 2025 and 13% in 2026 and that new home sales will jump 11% in 2025 and an additional 8% in 2026.

During a NAR conference in Boston, Yun explained that after presidential elections, it doesn’t matter who wins, as there’s usually a slight boost in home sales. This removed uncertainty, and now that we know upcoming policy changes, it’s easier to make predictions about what will happen and make a decision based on that.

Final Thoughts

Home prices are at record highs, and mortgage rates have climbed again. However, prices are rising at a slower pace thanks to an increase in the nationwide housing supply. Experts also expect price growth deceleration in 2025, Forbes reported.

Although demand has slowed, that won’t last much longer.

Experts say now might be the best time for would-be buyers to get ahead. Sales activity is picking up, and once rates moderate, we could potentially see a demand surge in 2025.

So if you’re thinking about buying – or selling – in 2025, start preparing now!

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.