Are Home Prices Going Down in 2025?

The rise of interest rates to 7% has caused home sales to slow down. Though sales for the last quarter of 2024 were up from 2023, what we are seeing in 2025 is a drop in the number of homes that have gone under contract. Admittedly, we are only 21 days into the year, but there are other signs, also. We are seeing the days on the market higher than January 2024, the number of price changes is increasing, and the list price vs sale price is down. During the past several years we have seen the majority of homes sell for over the asking (list) price. The beginning of this year we are seeing homes selling for 1/2% below the list price. Now that's not much, but it's a trend that's been happening since the 3rd quarter of 2024 when homes sold for an average of about 1% below list price. Compare that with 2023 when homes were selling for about 2% OVER the list price. 

 

I'm not giving you a doom and gloom report if you are thinking about putting your home on the market this year because home values are still at record highs. I just want to give you the reality of the market - you can't expect to get over the asking price IF you list your home at market value or above. It could still happen, especially if your home shows especially well, is in move-it condition, and is in a desirable neighborhood. 

 

This housing market is on hold until mortgage rates come down. When will that be? I have no idea. We knew that mortgage rates over 7% were possible for the year, and here we are. I still expect we’ll see rates drop under 7% for the 30-year fixed-rate mortgage during the year, but until that happens, home sales are at a standstill. 

 

For more, in-depth info on the national real estate market trends, watch this video from Altos Research.

 

Jim Armstrong
Broker/Real Estate Instructor
jarmstrong@armstrongfield.com
ArmstrongField.com