Mid-July 2024 Housing Market Update and 2025 Predictions
Hey everyone! As we find ourselves in mid-July, the 2024 U.S. housing market is transitioning from the usual peak season for home prices to a softer period. Despite the possibility of some month-over-month declines in the latter half of the year, most analysts expect national home prices to finish 2024 with positive growth. This would mark the 13th straight year of national home price appreciation.
So, what’s in store for 2025?
According to a recent round-up by ResiClub, the average forecast anticipates a 2.5% rise in U.S. home prices in 2025.
Goldman Sachs is quite optimistic, predicting a 4.4% increase.
Moody’s is more cautious, expecting a modest 0.3% rise.
Looking beyond 2025, Goldman Sachs thinks national home price growth will stay close to its historical average of 4.5% per year, as measured by the Case-Shiller National Home Price Index. While Moody’s sees a period of little to no growth, due to stretched affordability relative to incomes.
Even if the national average holds, we will likely see regional differences. Some areas could see mild declines, while others might enjoy higher appreciation. Key metrics to watch include the labor market and active housing inventory/months of supply, which are currently showing some softening in parts of the Gulf, including Florida’s condo market.
ResiClub’s analysis focuses on publicly issued forecasts or those provided directly to them. Not all estimates are included, such as those from John Burns Research and Consulting, which are shared exclusively with their clients. To keep comparisons consistent, different indexes were also considered, like the Case-Shiller National Home Price Index by Goldman Sachs and the Freddie Mac House Price Index by Freddie Mac.
For a more detailed look, check out the full article on Fast Company.
My Take
The outlook for 2025 suggests moderate growth in national home prices, with a balanced perspective of 2% to 3% national price growth increases considered most probable.
During the pandemic, some housing markets skyrocketed in value as people flocked to suburban and rural areas, thanks to remote work and lifestyle changes. But now, those areas might see a dip in prices as demand levels out and affordability becomes an issue.
Adding to the mix, many buyers in areas like Florida purchased properties to use as Airbnb or vacation rentals. However, many of these investments aren't generating the expected returns, leading owners to sell and increasing inventory levels. This really shows how different local market trends can play out in real estate.
As always keeping an eye on regional variations will be important, as some markets might diverge significantly from national trends. The labor market and inventory levels will be key indicators, especially in regions like the Gulf where we’re already seeing some softening.
Overall, the consistent positive growth expected for 2024 and the cautiously optimistic forecasts for 2025 reflect a resilient housing market, despite regional disparities and ongoing challenges like affordability and housing supply constraints.