Existing Home Sales Jan 2025: Prices High, Volumes Soft, Inventory Up

The trend line echoes recent moves with prices higher YoY even if off the highs and down sequentially.

Feb 21, 2025

The existing home sales trend line keeps the streak alive for YoY price increases at 19 straight months while prices ticked lower sequentially and inventory rose.
While prices for total existing sales did rise YoY, they at least fell below the $400K line after 9 straight months of $400K handles for existing homes at $396.9K but stayed above the $400K threshold on single family at $402K.
The YoY rise in existing sales kept the streak going for the 19^th straight month.
Inventory is up by +16.8% for total existing family homes and +15.7% YoY for existing single family homes, but that does not mean the price is right.

The above chart shows the deltas by price tier with the 2 lowest price tiers down and the 4 higher in proportion to the price tier. That ties into the income brackets more likely to get squeezed out based on mortgage rates or higher prices. That is a pattern we have seen frequently over the past year.

The above chart shows the geographic mix of volumes and details on price mix by region. The South is the main event in single family volumes whether new or used at almost 45% of volumes for single family existing.

For the bar chart, we break out the mix for each region by price tier. For example, the South shows almost 52% of its existing home sales volume in the $250k to $500K and around 15% of its sales in the $500 to $750K bucket. The bars for each region add up to 100% (occasionally a rounding miss!). The high cost of homes in the West (notably California) is clear enough in the West price mix just by glancing at the bar chart with over 18% in prices over $1 million. The second highest in the $1 million club is the Northeast at almost 11%.

We see a big concentration in the $250K to $500K bracket for all regions at almost 45% of the total and a heavy weighting in the $100K to $250K bracket for the Midwest at over 35%. The map explains what states are in each Census region, and there is a wide range of home price profiles in the West and Midwest.

Inventory rose on the month by +3.5% sequentially to 1.18 million for total existing homes. The existing home inventory trend is back to climbing off the lows of 2022-2023. Inventory had risen into the 1.3 million handle range in 2024 before dipping back down to a recent low of 1.14 million to close out 2024. We see the Feb 2022 low at 850K when demand was very high just before the tightening cycle kicked into gear in March 2022. Separately, single family home inventory is up by +15.7% YoY and +4.0% sequentially.

The above two-sided chart updates the trend line in total existing home sales vs. new single family homes. We look at this trend each month in the New Home Sales release when the two are on the same month (the above chart is for Dec for new and Jan for existing). New home sales for January will be released on Feb 26th.

With mortgage rates generally in the high 6% range again and Freddie Mac’s benchmark set at 6.85% yesterday at noon, the affordability headwinds remain very much alive. Color from the homebuilders in some recent earnings reports signal that the mortgage buydowns and incentives have not been as effective in the new home sales market even as the existing home sales market is still seeing a gap between what the seller wants and how the buyer sees the world. That in turn continues to undermine transaction volume.

The above chart breaks out the timeline for single family alone of 3.68 million vs. total existing home sales of 4.08 million, which is well below the long-term median (from Jan 1999) of 5.23 million for total existing homes. The lower line is ex-condo/ex-co-ops. We saw 400K in condos and co-ops in Jan 2025, down from 410K in Dec 2024.

The above chart updates the median price for existing single family homes at $402.0K. Though down from the June 2024 high of $432.9K, the median price remains well above the $308K back in Jan 2021 and $277K in Dec 2019 when mortgage rates were in a different zip code.

Potential sellers and buyers had some recent mortgage relief in the low 6% range in late Sept and early Oct 2024 before mortgage rates pushed back to the 7% area. We saw 6.85 % posted by Freddie Mac’s benchmark on Thursday.

The above chart updates the monthly existing home sales across the timeline from Jan 2022 through Jan 2025. The market is a long way from the mid-6 and high 5 million handles of 2021 and then into early 2022 when many homeowners refinanced, and new buyers locked in low mortgages. ZIRP ended in March 2022 and then the UST migration began.

The Jan 2025 total of 4.08 million is around the May 2020 COVID trough of 4.07, so there are not too many bragging rights in run rates. We had a few more sub-4 million handles along the way as noted in the chart, so this has been a brutal period for brokers.

The above chart revisits the topical area addressed earlier on the existing home sales deltas by price tier. The largest tier is the $250K to $500K at almost 44% of sales volumes, and that was up by +4.2% YoY.

The challenge for the lower tier buyer is evident in the decline of -1.2% in the $100K to $250K tier that comprises 20% of volume while the $500K to $750K tier is over 7% of the market and rose by almost 19%.

Footnotes & Flashbacks: State of Yields 2-16-25

New Home Sales Dec 2024: Decent Finish, Strange Year 1-28-25

Existing Home Sales Dec 2024: Another “Worst Since” Milestone 1-24-25

Housing Starts Dec 2024: Good Numbers, Multifamily Ricochet 1-17-25

Homebuilders:

Toll Brothers 1Q25: Performing with a Net 2-20-25

Credit Crib Note: Lennar Corp (LEN) 1-30-25

D.R. Horton: #1 Homebuilder as a Sector Proxy 1-28-25

KB Home 4Q24: Strong Finish Despite Mortgage Rates 1-14-25

Toll Brothers: Rich Get Richer 12-12-24

PulteGroup 3Q24: Pushing through Rate Challenges 10-23-24

KB Home: Steady Growth, Slower Motion 9-26-24