The housing market showed promising momentum in December, with home sales and construction activity providing optimistic signals as we move into 2025. Here’s a closer look at the latest data and trends.
Existing Home Sales Rise
In December, sales of existing homes increased modestly from November, reaching the highest level since February. Year-over-year, these sales climbed by 9%, indicating steady demand despite challenges in the housing market.
The median price of existing homes rose to $404,400, reflecting a 6% increase compared to the same time last year. Despite the home sales rise, inventory levels remain tight, with a national supply of just 3.3 months—well below the 6-month threshold considered balanced. On the bright side, inventory levels were 16% higher than a year ago, a step in the right direction for easing supply constraints.
Housing Starts and Builder Sentiment
December also brought strong housing construction data. Total housing starts surged 16% from November, hitting their highest point since February 2024. This growth was primarily driven by multi-family units, which soared by 58%. Meanwhile, single-family starts rose by just 3%, and building permits for single-family homes—a leading indicator of future construction—saw only modest increases.
Homebuilder sentiment, measured by the NAHB, remained consistent with expectations, suggesting cautious optimism among builders regarding future market conditions.
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Mortgage Applications Show Positive Trends
The mortgage market also showed encouraging signs. According to the Mortgage Bankers Association (MBA):
- Purchase applications increased by 1% from the prior week and were slightly higher than last year at this time.
- Refinance applications fell 3% from the previous week but were a remarkable 42% higher than one year ago, reflecting favorable refinancing opportunities as rates stabilize.
What’s Ahead?
Investors are now turning their attention to the upcoming Federal Reserve meeting on Wednesday. While no changes to the federal funds rate are expected, officials’ commentary on future monetary policy will provide critical insights for the housing market.
In the coming week, several key economic reports will shed light on broader market conditions, including:
- New Home Sales (Monday)
- Fourth Quarter GDP (Thursday)
- Personal Income and the PCE Price Index (Friday)
These updates will offer further clarity on the direction of home sales, construction activity, and broader economic growth.
