The New Year Brings More Inventory to the Market

Core Insights - January 2025 saw a significant increase in seller activity, with newly listed homes rising 37.5% month-over-month, indicating a potential shift in the housing market dynamics despite high mortgage rates [1][8] - The increase in new listings is attributed to various factors, including the need for families to adapt to life changes and a reduction in the lock-in effect, which may lead to more seller movement by the end of the year [2] National Housing Metrics - The median listing price decreased by 2.2% to $400,500 compared to January 2024, while it increased by 38.4% compared to January 2019 [2] - Active listings rose by 25.3% year-over-year, but were down by 25.3% compared to January 2019 [2] - New listings increased by 10.8% compared to January 2024, but were down by 18.0% compared to January 2019 [2] - The median days on market increased by 5 days to 73 days compared to January 2024, but decreased by 8 days compared to January 2019 [2] - The share of active listings with price reductions rose to 15.6%, an increase of 0.9 percentage points from January 2024 [2] - The median list price per square foot increased by 1.2% compared to January 2024 and by 54.9% compared to January 2019 [2] Seller Activity Trends - Newly listed homes were 10.8% above last year's levels, marking the highest January level since 2021 [3] - The share of mortgage holders with a rate under 6% fell to 83%, down from 88% a year ago, and is expected to decline to 75% by the end of 2025 [3] - Annual inventory grew for the 15th consecutive month, with 24.6% more homes actively for sale compared to January 2024 [3] Price Reduction Trends - The share of listings with price cuts increased to 15.6% in January 2025, up from 14.7% in January 2024 [4] - The top markets with the highest share of price reductions included Jacksonville (24.3%), Tampa (24.8%), Orlando (22.3%), Phoenix (25.5%), and Portland (22.1%) [4] Regional Inventory Trends - The South and West regions are leading in closing the inventory gap, with listings growing by 27.2% and 31.0% respectively [5] - The Midwest and Northeast regions saw lower growth rates, with increases of 16.8% and 7.8% respectively [5] - Compared to pre-pandemic levels, the inventory gap is smallest in the South (-10.0%) and West (-13.3%), while the Midwest and Northeast still face significant gaps of -43.6% and -58.1% respectively [5] Active Market Highlights - The most active markets in January 2025 included Denver (+54.8%), Las Vegas (+49.4%), and Tucson (+45.0%) for inventory growth [6]