Real Estate Corner

As we usher in 2025, the housing market presents a mixed but cautiously optimistic picture.

Comparing data from January 1, 2025, to January 1, 2024, reveals several noteworthy trends,

particularly in supply, demand, and pricing.

Supply Trends: Seasonal Declines and Future Uncertainty Active listings, excluding “Under Contract Backups” (UCB) and “Contingent Contract on Buyer Sale” (CCBS), increased by 37% year- over – year to 20,007. However, they experienced a seasonal decline  of 7.3% from December’s 21,593. When UCB and CCBS listings are included, active listings  reached 22,196, a 35% increase from last year but down 8.2% month-over -month.

This reduction aligns with the typical seasonal pattern where listings expire in December. The late but sharp decline in supply during November and December highlights sellers’ hesitance amid high mortgage rates. While fewer active listings create less competition for sellers, uncertainty looms

over how many expired listings might re-enter the market in January.

Demand Slowly Rebounds: Pending listings showed a modest 1.3% annual increase to 3,307 but dropped 13.2% compared to December. Meanwhile, under – contract listings, including UCB and CCBS, rose by 7.2% year-over-year to 5,496, though they fell 14% month-over-month.

The most significant positive shift was in monthly sales, which jumped 13.4% year-over-year to 5,581, and saw an 8.4% monthly increase. This marked improvement indicates a slight recovery in demand, aided by balanced market conditions.

Pricing Strength Reflects High – End Market Dynamics: Pricing metrics have shown unexpected resilience. The monthly average sales price per square foot climbed 6.8% year-over-year to $303.62 and increased 4.7% from December. The monthly median sales price remained steady at $450,000, reflecting a 4.7% annual increase.

Much of this strength stems from luxury home sales. Affluent buyers, buoyed by gains in the stock market and cryptocurrency, have driven demand in upscale markets like the Northeast Valley. This upward pressure in pricing highlights the divergent performance between high- end and entry- level markets.

Market Outlook: Balanced but Vulnerable. The Cromford® Market Index (CMI), which measures market balance, has returned to the neutral zone (90 – 110). While this marks an improvement from buyer – favored conditions earlier in 2024, outlying areas remain advantageous for buyers. ​

Builders, however, face challenges as unsold new home inventory grows nationwide. Despite high mortgage rates exceeding 7%, builders may offer increased sales incentives to clear completed

inventory.

Challenges Ahead: While demand recovery is encouraging, its trajectory remains uncertain due to high borrowing costs. Future market stability hinges on new supply levels. A light influx of listings could sustain balance, but a surge may tip conditions back into a buyer’s market.

The housing market’s trajectory in 2025 will depend heavily on economic factors, particularly

mortgage rates and broader supply dynamics. For now, the market appears poised for gradual  stabilization , but vigilance is required as we navigate the early months of the year.

Bill Cole, Associate Broker, Realty ONE Group Scottsdale. Email: bill@billole.com. Direct: 206.949.1372. Sources ARMLS  and The Cromford Report / Tina Tambour