Weekly pending home sales finally exceed 2024
After a very disappointing first quarter with home sales failing to climb over 2024’s already anemic levels, signs are finally emerging in March that we’ve turned the corner to have some growth.
This week’s pending home sales count came in at just under 69,000 single-family homes, which was 2.3% greater than the same week a year ago. That’s really the first week all year where home sales exceeded those of 2024.
Home sales aren’t strong, of course. But mortgage rates are now below where they were last year at this time. Rates have been generally sliding slower, while last year at this time, rates were rushing to their highest point of the year. So, it is in fact fractionally more affordable to buy a home right now than last year at this time. Home prices have not really appreciated any over the past year in most of the country. In many markets, home prices are lower than where they were a year ago, so I imagine some buyers are finding opportunity where they have felt thwarted for many years.
So, home sales are rising. But inventory of unsold homes is rising too. In fact, the supply side of the supply-demand equation is moving faster. The weekly new listings count is finally getting back closer to the old normal pre-pandemic levels and the number of available homes on the market is the highest it’s been in many years.
As of now, the complete picture says to me that we should expect home sales to continue slight growth in the second quarter, but as supply grows too, the current pressures on home prices are down, not up, in most parts of the country.
Let’s take a look at the data and we’ll see the specifics.
Weekly pending home sales
There were nearly 69,000 new contracts started for single-family homes. There were another 14,000 condo sales this week. The week’s pending home sales were up 4% from last week and came in 2.3% greater than the same week a year ago. I expected this little threshold to be crossed this week and the market is moving exactly as I discussed.
In this chart, the purple line is the 2025 rate of weekly pending home sales. It’s climbing as you’d expect for March. Not skyrocketing, but each week in the spring there are more home sales than the week prior. That’s normal. What’s also visible in the chart is the blue line from last year. Last year, the second quarter, and even more so the third quarter, were really lousy because mortgage rates moved the wrong direction. So, if we’re lucky this year and mortgage rates tick lower, then we should see each week with home sales growth over 2024.
Easter is late this year so that dip will happen later in April and most of April will come in with home sales growth. However, by the time we get to the third quarter, there are new variables that we haven’t had to deal with in the housing market in many years, like if the economy continues to slow. We don’t yet have visibility on if or when that would put the brakes on home purchases again.
For now, there are mostly positive signals in home sales. Two negative notes on the weekly pending home sales numbers though; condo sales are still running below last year, and this may be a signal about the economy. Better financed and better employed folks generally lean towards single-family so you can see economic slowdown in condo sales first. Also, Florida home sales are still down year-over-year. The Florida market has much more challenges than Texas, for instance.
As of right now, nationally, home sales are ticking higher and should come in showing growth over 2024 in the coming weeks.
Inventory
On the supply side, there are now 668,000 single-family homes unsold on the market. That’s a substantial, nearly 2% climb for the week and also 30% greater than last year at this time.
Inventory is building faster than I expected at the start of the year. There are more sellers, and even though home sales are starting to pick up, the seller volume is moving a little bit faster. This was a gain of nearly 13,000 single-family homes on the market. That’s a 2% gain for the second week in a row.
Inventory is growing faster than it was last year at this time. We’ve expected that inventory will generally keep growing, that’s not a surprise, but it grew pretty quickly last year. So, I expected not as steep a slope in 2025. But so far, the slope looks to be steepening.
In this chart, each line is the year’s curve of available inventory at any given moment. The purple line for 2025 is marching higher. If you’ve been paying attention here, you’ll know that our forecast model has 2025 ending with just about as many homes unsold on the market as we saw to end 2019. I’ve described that as finally an end to the crisis inventory shortage we’ve been in for five full years.
Each week where inventory growth exceeds expectations means the end-of-year projections inch upward too. I’ve highlighted 2024 and 2019 here so you can see how the year’s inventory growth should end up. The latest HousingWire inventory forecast model for the full year says inventory will grow by 20% by year end. That forecast has been adjusting higher most weeks so far this spring.
New listings
Why is inventory rising when sales are rising? Well, we finally have some homesellers who are ready to move. Americans have been sitting on the sidelines with their ultra cheap mortgages for years now, delaying a move, and delaying listing their house for sale. That’s finally starting to change. We can track homeseller sentiment changing in the weekly new listings data.
This week there were 70,000 new single-family listings unsold that hit the market. That’s up 2.2% for the week and is 15.5% more than last year at this time. There were 14,000 new listings immediately sold, already in contract, so in total there were nearly 9% more sellers than the same week a year ago.
In our weekly new listings chart you can see the purple line is substantially above the blue line of 2024 and climbing each week with 2.2% more new listings than a week ago.
It’s totally normal for new listings to climb each week in the spring. The market is underway. But the real trend for 2025 is how the weekly volume of homesellers is finally approaching the gray lines at the top and separating from the gray lines at the bottom of the chart.
The lines at the bottom are the last five years with Americans holding on to their ultra-low mortgage rates, the “lock-in” effect. The gray lines at the top are the years 2015-2020, when we used to have 80,000 to 100,000 new listings in a given week.
We’re not quite back at those old normal levels, but by the end of June, we should expect to.
Where are the sellers coming from? I suspect two channels of motivation for homesellers this spring. The first is that they’ve been sitting on the sidelines for three full years. It’s time to finally move. The second is what I call “bad economy sellers”. These are folks that are perhaps sensing economic downturn and want to get out before it gets worse. It’s probably very early in the cycle to be identifying these sellers. But we haven’t had a notable economic downturn in this country in 15 years. So, the prospect of unemployment or lower income is only anecdotally starting to creep into homeseller decision making.
I don’t know whether recession is coming. It could still be a long way off. But I think the key takeaway for potential homesellers is that if you’re thinking along these lines, you should know that your competition is increasing this year. I don’t see signs of the market getting easier for sellers in 2025, so that is something to be aware of when you’re making home selling decisions this year.
Home prices
Home prices are barely positive compared to last year at this time. The median price of the week’s pending home sales came in just under $394,000, just 1% above last year.
So, nationally, home prices are essentially unchanged. In fact, there are five states where home prices are actually below last year; Texas, Georgia, South Carolina, Washington and Montana. There are 4 or 5 more states including Colorado, Florida, and Arizona which I will not be surprised to see go negative in annual home price change in the next few months.
There are still plenty of markets with very tight inventory and enough demand that home prices are rising; New York, New Jersey, Connecticut, and much of the Midwest. So overall for the country, home prices are flat for the year, just barely positive.
In the HousingWire/Altos data, we track a bunch of home price measures. The median asking price for all active market listings is only 20 basis points higher than last year. There are no signals for any notable home price appreciation in 2025.
In this chart we have the median price of the week’s pending home sales. The purple line is climbing for the spring but is barely above last year. Unless mortgage rates jump over 7% again, I don’t see a catalyst for significant price decline like we had in that light green line from 2022. But as supply continues to grow, the price comparisons with last year become more difficult, especially in the fourth quarter. There are plenty of scenarios visible now where home prices nationally decline for the calendar year 2025.
Pride reductions
The share of homes on the market with price reductions ticked up again this week to 34.3%. That’s 40 basis points more than a week ago. It’s not a fast change. This spring is not a deteriorating market like 2022.
I’ve highlighted the price reductions curve from 2022 here today in green. At the time, there was a dramatic slowing of the housing market and it led to rapid home price declines. Those were short lived as the economy still had a lot of cash to support buyers in 2023.
This year is different. There are more price reductions now than any time in many years. Price reductions are increasing, which indicates that even as home sales start improving, there is nothing in the data that says that home prices will also climb. In fact, we could be looking at a year in 2025 when we say home sales climb over last year but home prices fall for the first time since 2010.
We haven’t seen dramatic changes in the price reductions curve lately. This signal can change fast when market conditions change fast. For example, when mortgage rates spike. But we’ve been in a more slowly moving market lately. I expect those recent patterns of slightly improving sales and flat home prices to continue as a result for the next few months.
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