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Late 2024 revealed that the U.S. housing market remains as unpredictable as ever. Mortgage rates are hovering around 7%, far exceeding most economists’ forecasts. Furthermore, record-high housing prices continue to rise across various regions.
Some recent indicators provide hope for improvement in 2025. Increased housing inventory and reduced demand in certain regions have slowed price growth and, in some areas, even led to declines. Experts predict this trend will continue into 2025, potentially benefiting buyers.
However, despite expectations of better conditions, the number of pending sales continues to grow. This suggests that many potential buyers are returning to the market, ready to proceed with transactions under current conditions.
According to the S&P CoreLogic Case-Shiller Home Price Index, U.S. housing prices grew 3.9% year-over-year in September, down from 4.2% in August. The index shows that price growth has been slowing for six consecutive months, following a peak increase of 6.5% in February and March. Analysts anticipate this slowdown will continue through mid-2025, with growth decelerating to 2.3% by August.
Despite the price deceleration, housing remains unaffordable for many. Over the past five years, average housing prices have increased by 40%. With property taxes and insurance factored in, it’s clear why homeownership remains out of reach for many.
Nevertheless, experts view the slowdown in price growth as an encouraging sign of improved conditions for buyers. Robert Frick, a corporate economist with the Navy Federal Credit Union, stated that even if mortgage rates decline, slower price growth could significantly improve conditions for buyers in 2025.
Given the significant changes in lending practices and the strengthened financial positions of modern homeowners, experts believe the market remains stable and protected from a repeat of the 2008 crisis.
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