Modest Rise in Home Tours in Early 2025: Will It Lead to More Sales?
As 2025 begins, the U.S. housing market shows subtle signs of recovery. Redfin’s Homebuyer Demand Index, a key indicator of tours and other buying services, has recorded a 2% increase compared to the previous month and year-over-year. Despite this uptick in buyer activity, the market is yet to see a corresponding rise in home sales. Here, we explore the reasons behind these trends and what they mean for buyers, sellers, and the broader market.
Understanding the Modest Increase in Home Tours
Factors Driving Buyer Interest
Several factors contribute to the recent increase in home tours:
- Acceptance of High Mortgage Rates: With 30-year fixed mortgage rates hovering around 7.17%, many buyers have come to terms with higher borrowing costs.
- Seasonal Activity: The start of the new year typically encourages more house hunters to re-enter the market after the holidays.
- Increased Inventory: A higher number of active listings compared to recent years is giving buyers more options to explore.
Emily Lam, a Redfin Premier agent in Seattle, explains, “Three of the four offers my clients made last week faced competition, with some buyers waiving contingencies and releasing earnest money early. Many have adjusted to 7% rates, worried about rising home prices if they delay.”
Google Trends and Search Behavior
Google searches for “home for sale” rose 29% in early January compared to the previous month, reflecting renewed buyer curiosity. However, searches remain 8% lower than this time last year, indicating tempered overall demand.
Why Increased Tours Haven’t Boosted Sales
Decline in Pending Sales
While buyer activity has increased, pending sales dropped by 3.1% year-over-year during the four weeks ending January 5. This decline can partially be attributed to the unusually high demand in early 2024 when mortgage rates temporarily dipped.
Seller Reluctance
New listings fell by 2.5%, marking the largest decline in over a year. This hesitancy among sellers reflects uncertainty about market conditions and concerns over finding affordable replacement homes.
Key Market Metrics
National Trends
The four weeks ending January 5, 2025, reveal the following housing market metrics:
- Median Sale Price: $379,988 (up 5.5% year-over-year)
- Median Asking Price: $374,975 (up 4.5%)
- Median Days on Market: 49 (6 days longer than last year)
- Months of Supply: 4.3 months, signaling a balanced market.
Regional Highlights
Metros with notable trends include:
- Biggest Price Increases: Milwaukee (+19.5%) and Cleveland (+17.1%)
- Biggest Price Decreases: Austin (-1%)
- Pending Sales Growth: Anaheim (+10%) and Cincinnati (+7.7%)
- New Listings Growth: Washington, D.C. (+9.4%) and Phoenix (+9.2%)
What This Means for Buyers and Sellers
Advice for Buyers
Given the competitive nature of desirable listings, buyers should:
- Get Pre-Approved: Secure financing early to act quickly.
- Adjust Expectations: Be prepared to face multiple offers and consider waiving certain contingencies.
- Monitor Rates: While rates remain high, a slight dip could provide savings.
Advice for Sellers
Sellers can benefit from:
- Pricing Strategically: Competitive pricing can attract serious buyers.
- Timing the Market: Listing sooner rather than later could help leverage early-year activity.
- Highlighting Unique Features: Emphasizing energy efficiency or recent renovations can set a home apart.
Leading Indicators to Watch
Mortgage Rates
The average 30-year fixed mortgage rate reached 7.17% as of January 8, the highest since May 2024. Future fluctuations will significantly impact buyer behavior.
Inventory Levels
Active listings are up 10.6% year-over-year. An increase in inventory may give buyers more choices but could also moderate price growth.
Insights
Why Are Buyers Competing Despite High Rates?
Some buyers fear rising prices will outpace interest rate declines, motivating them to act now despite current costs.
Will Home Tours Lead to More Sales?
While increased tours signal interest, sustained growth in sales will depend on sellers listing homes and buyers adapting to market conditions.
Is This the Right Time to Buy or Sell?
For buyers, acting now may secure a home before prices climb further. For sellers, early 2025 presents an opportunity to attract motivated buyers.
As the housing market navigates through 2025, staying informed and prepared will be crucial for buyers and sellers alike. Whether rates stabilize or inventory fluctuates, market participants must remain agile to make the most of emerging opportunities.
