Things are looking up, or at least you'd think they should be, for mortgage originators. As of January, there were 3.7 months of for-sale home supply on the U.S. market, up 12% from 3.3 months in January 2024.
That’s the largest supply of homes for sale since February 2019, according to real estate brokerage Redfin, which in a report today noted that “the U.S. housing market has tilted in favor of buyers for the first time” in the 2020s.
Problem is, “many buyers don’t feel like they are in a buyer’s market, with home prices at near-record highs and mortgage rates elevated,” Redfin Economics Research Lead Chen Zhao said in a release.
But, this may be as good as it gets under the new norm: “We are more than halfway through the decade and this is the first time we can say that buyers have as much, if not more, power than sellers,” Zhao added.
Besides home inventory rising, there are other signs favoring buyers — and, yet, also mixed signals for closed deals — ahead of the spring buying season, according to Redfin, including:
- Pending sales fell 6.3% in January to their lowest point since April 2020;
- The typical home sold in January was on the market for 56 days, the longest since February 2020;
- The median U.S. home price was up 4.1% year-over-year in January, the slowest growth since September and “more in line with the rate experienced in the late 2010s”;
- The typical home sold for 1.8% less than its final asking price last month, the biggest discount in nearly two years; and
- Last month, home purchases were canceled “at the highest January rate since at least 2017.”
Still, even though the outlook points to a moderate buyer’s market nationally, the reality once you dial in more closely can present an even stronger, or weaker, favorability for buyers. For instance, it’s still a seller’s market in the Northeast, where home supply is limited and there’s strong buyer demand, according to Redfin.
Meanwhile, there’s more inventory for buyers to choose from across the Sun Belt states, particularly in Florida, which Redfin noted has six of the top 10 major metros with the most months of for-sale home supply.
U.S. metro areas with the most home inventory as of January 2025 were:
- Cape Coral, Fla., which had 11.6 months’ worth of home supply for sale, up three months from January 2024;
- Miami, Fla., which had 11.4 months of home supply, up three months from a year ago;
- McAllen, Texas, which had 10.5 months of home supply, up 2.5 months compared to January 2024;
- Fort Lauderdale, Fla., which had 10.3 months of home supply for sale, up 2.9 months from January 2024;
- West Palm Beach, Fla., which had 9.6 months of home supply, up 1.8 months from January 2024;
- New Orleans, La., which had 8.1 months of home supply for sale, up 0.3 month from January 2024;
- North Port, Fla., which had 7.3 months of home supply, up 0.6 month from January 2024;
- Honolulu, Hawaii, which had 6.4 months of home supply, up 0.6 month from January 2024;
- Jacksonville, Fla, which had 6.3 months of home supply for sale, up 1.1 months from January 2024; and
- San Antonio, Texas, which had 6 months of home supply, up 0.4 month from January 2024.
Even though nationally there’ve been home inventory gains — a favorable sign for more purchases, you'd reason — affordability challenges among prospective homebuyers have kept the housing market stagnant over the past five months.
According to the First American Data & Analytics Home Price Index (HPI) for January, home prices are still way up — about 55% higher now, in fact, compared to pre-pandemic levels in February 2020. Home prices, rates, and property taxes are all expected to affect homebuyer decisions this year, and it could make for a possible extended “housing winter” in 2025, much as 2024’s and 2023’s spring homebuying seasons were subdued.
“Much like the groundhog seeing its shadow, we expect this ‘housing winter’ to persist if mortgage rates remain high while inventories keep climbing,” noted First American Chief Economist Mark Fleming.
Also, according to Redfin, although last month brought the highest housing supply since January 2020, buyers aren’t biting, feeling economic uncertainty and perhaps — as some sellers also do — that home prices could be at a peak.
“Economic fears have been top of mind for people. I have sellers saying, ‘I think we're at the top of the market — I’m ready to cash out and put my money into another investment,’” stated Charles Wheeler, a Redfin agent in San Diego, Calif.
As all of these factors are swirling in the mix, nationally, rents are softening, which is also keeping some potential buyers sitting on the fence. Realtor.com reported yesterday that renting a median-priced unit is now more affordable for median-wage earners than buying the median-priced home listed in all major U.S. metros except Detroit, Mich., and Pittsburgh, Pa.
So, it’s mortgage rates (and volatility therein), home prices, inventory, and buyer/seller sentiment and perception as we roll toward this spring buying season. Where this train stops is anyone’s guess.
