In 2024, the US housing market continued to face significant challenges, with existing home sales dropping to their lowest levels in nearly three decades. The National Association of Realtors reported that sales of previously owned homes totaled 4.06 million, marking the lowest figure since 1995 and remaining just below the lackluster levels seen in 2023.
Skyrocketing home prices and elevated mortgage rates played a significant role in dampening buyer enthusiasm. The average rate on a 30-year fixed mortgage peaked at 7.22% last year and has remained high, hovering around 7% according to Freddie Mac's data. Simultaneously, the median price of existing homes surged to a record high of $407,500 in 2024, with December's median price hitting $404,400.
Despite these challenges, there was a glimmer of hope towards the end of the year, with December seeing a 2.2% increase in existing-home sales compared to the previous month, reaching a seasonally adjusted annual rate of 4.24 million, the fastest pace since February 2024.
Looking ahead, the housing market may not see significant relief for buyers in the near future. Mortgage rates are forecasted to remain above 6% throughout 2026 while home prices continue to remain elevated. Additionally, homeowners in certain markets are grappling with soaring home insurance premiums, with little respite expected this year.
A key factor contributing to the ongoing housing affordability issue is the persistent lack of inventory. While total housing inventory saw some improvement in 2024, it still falls significantly short of meeting demand. The lock-in effect, where some homeowners are discouraged from selling due to higher mortgage rates, further exacerbates this undersupply issue.
However, there is some optimism among builders that deregulation efforts could help boost home supply in the coming year. Scott Turner, the nominee for the US Department of Housing and Urban Development, expressed a commitment to reviewing and reducing regulations to ease pressure in the housing market. While deregulation may provide some relief, challenges such as potential tariffs and mass deportations could add to the cost of new home construction and impact the market.