U
.S. homebuyers currently have the most options available since 2020, according to national brokerage Redfin. However, rising housing costs are deterring many from making purchases, making monthly mortgage payments increasingly difficult.
In January 2025, pending U.S. home sales dropped to their lowest level on record, aside from the early pandemic period, declining 4.2% from the previous month and 6.3% year over year. Meanwhile, active home listings reached their highest point since the early days of the pandemic, rising 0.3% month over month and 12.9% compared to last year.
Several factors are contributing to the rise in available homes:
* The mortgage rate lock-in effect is easing as homeowners who secured historically low rates during the pandemic become more willing to sell.
* Homes are sitting on the market longer, with the typical home sold in January spending 56 days on the market, seven days longer than a year ago.
However, several factors are making it harder for buyers to commit:
* Mortgage rates hit an eight-month high, reaching 6.96% in January, up from 6.72% the previous month.
* More deals are falling through, with approximately 41,000 home-purchase agreements canceled in January, a record high since 2017.
Economic uncertainty is also contributing to the decline in housing demand, as factors like potential tariffs and fluctuating mortgage rates make both buyers and sellers hesitant. "I'm seeing a lot more inventory hit the market than in past years, but it's still not enough," said Charles Wheeler, a Redfin Premier real estate agent in San Diego.
Home prices continue to rise, but growth has returned to pre-pandemic levels of around 4%-5% annually. This moderation is partly due to a more balanced supply-and-demand dynamic, as more listings hit the market. However, prices remain high because the overall housing supply is still insufficient.
Metro-level highlights for January 2025 show varying trends across regions:
* Home prices increased in Pittsburgh (+15.4%), St. Louis (+13.2%), and Anaheim, CA (+13.1%).
* Pending sales rose in Portland, OR (+11.4%), San Jose, CA (+8.2%), and Milwaukee (+4.7%).
* Closed sales grew in Portland, OR (+12.8%), Providence, RI (+10%), and Boston (+9.9%).
