Here are the basics - the ARMLS numbers for January 1, 2025 compared with January 1, 2024 for all areas & types:
- Active Listings (excluding UCB & CCBS): 20,007 versus 14,593 last year - up 37% - but down 7.3% from 21,593 last month
- Active Listings (including UCB & CCBS): 22,196 versus 16,457 last year - up 35% - but down 8.2% compared with 24,178 last month
- Pending Listings: 3,307 versus 3,263 last year - up 1.3% - but down 13.2% from 3,808 last month
- Under Contract Listings (including Pending, CCBS & UCB): 5,496 versus 5,127 last year - up 7.2% - but down 14% from 6,393 last month
- Monthly Sales: 5,581 versus 4,923 last year - up 13.4% - and up 8.4% from 5,147 last month
- Monthly Average Sales Price per Sq. Ft.: $303.62 versus $284.40 last year - up 6.8% - and up 4.7% from $290.02 last month
- Monthly Median Sales Price: $450,000 versus $429,900 last year - up 4.7% - but unchanged from $450,000 last month
There is quite a lot of positive news in these numbers. Obviously supply is down from the November peak, but we would expect that as part of the usual seasonal pattern. What we don't know is how fast supply will grow again in January and we will be closely watching that over the next several weeks. The decline was late starting in November but it really accelerated in December and ended in a big bang with a large number of listings expiring at the end of December. For sellers it is much better to have 7.3% fewer active listings to compete with. But if those expiring listings come straight back in January, the good news will have been an illusion.
Closed sales counts are improving nicely. December's count was up more than 13% from a year ago, although we have to admit this was an easy target to beat. It is encouraging that the annual sales count has risen to almost 72,000. much healthier than the 69,627 we saw at the end of September. However, it is still well below the long term average of 85,000 per year.
Under contract counts remain subdued but at least we managed a 7% increase from the beginning of 2024.
A combination of reduced supply and a slight recovery in demand means the Cromford® Market Index has returned to the balanced zone between 90 and 110. We are no longer in a buyer's market across all areas, though several outlying locations remain very favorable to buyers.
Overall, demand is slowly starting to rebuild, despite mortgage rates remaining stubbornly high. Our concern is that we do not know how much new supply will arrive during the next 3 months. If we get a light load then the market will continue to move towards balance. If we get a large number of new listings then we could slip back into a buyer's market. The next 4 weeks are likely to be critical.
Pricing was unusually strong in December, particularly when we look at the $/SF numbers. This measure is distorted by the relatively hot market in upscale luxury homes. These are selling in healthy numbers and for higher prices. A frothy stock market, combined with elevated cryptocurrency values means that those with significant capital investments are feeling much better off. The very wealthy have done extremely well over the past couple of years and as usual this has increased demand in the extreme high end markets, especially the Northeast Valley.
Most home builders' stocks tell quite an interesting story in 2024 having gained hugely in value by the end of September only to give most or all of those gains back by the end of December once it became clear that mortgage rates were not coming down in a hurry. The inventory of completed but unsold new homes has recently been increasing for the USA as a whole and new home supply is more plentiful than it was this time last year. This may lead to more flexibility from home builders in sales negotiations during the first half of 2025, especially concerning homes that are ready to move in.
With 30-year fixed mortgage rates over 7%, we do not anticipate strong growth in demand, but the reversal of the earlier declining demand trend is a good sign that we have seen the worst. Everything now depends on how much additional supply will arrive over the next few months.