Real Estate Market Highlights: Housing Market Struggles, Mortgage Rate Uncertainty, and Supply Increases

Realty Biz News Daily Update: Fri, January 31, 2025

The U.S. real estate market faces challenges from declining home values in certain regions, uncertainty around interest rate cuts, and a rise in available housing supply. While some areas are experiencing a downturn in growth, potential buyers could find opportunities amid changing conditions. Here’s a closer look at the latest developments in the real estate sector.

The Worst Housing Markets for Growth in the U.S.

Several housing markets across the U.S. are struggling, with some cities seeing significant declines in home values and slow sales activity. Key factors affecting market performance include price cuts, closing times, and overall home value changes.

Austin, TX: Home values have dropped nearly 18% over two years, with an average price reduction of $80,737. More than 20% of listings have price cuts, and homes take about 29 days to close.
New Orleans, LA: The one-year home value change is a modest 3.2%, while the two-year increase is 5.3%. However, nearly 30% of listings have price reductions, and the average price cut is around $14,907, with homes taking 34 days to sell.
Texas Markets: Other struggling areas include Longview, Laredo, and Dallas, which have all experienced declining home prices and slow sales.
Florida Markets: North Port, Cape Coral, and Crestview have also been listed among the weakest housing markets, with sluggish growth and high price reductions.[1]

U.S. Tariffs Could Impact Calgary’s Housing Market

Though Calgary’s (Alberta, Canada) real estate market is expected to remain strong, new U.S. tariffs could trigger economic instability in Alberta, which might impact real estate demand. The Calgary Real Estate Board (CREB) outlines two potential outcomes:

Optimistic Scenario: Sales remain 20% above historical averages, with high demand for affordable single-family homes and falling interest rates fueling activity.
Negative Scenario: A potential recession in Alberta, driven by U.S. tariffs on Canadian exports like oil and gas, could weaken consumer confidence and slow the housing market.

Despite possible risks, the market is projected to see over 26,000 sales in 2025. Housing supply is increasing, particularly in multi-family units, which could lead to lower apartment prices. Single-family homes under $1 million, however, are expected to appreciate in value.[2]

Mortgage Rate Uncertainty: The Fed’s Next Move

The Federal Reserve held off on rate cuts in its January 29 meeting, leaving interest rates unchanged. Fed Chair Jerome Powell signaled that future cuts depend on inflation data, making it unclear when relief will come for borrowers.

Mortgage rates remain closely tied to the 10-year Treasury yield, and high inflation could keep rates above 6.5% through 2024.
Homebuyers continue to struggle with affordability due to high mortgage rates and rising home prices.
The low housing inventory—about 3.7 million homes below typical levels—has kept home prices elevated despite lower buyer demand.
Many homeowners with mortgage rates below 5% are unwilling to sell, further limiting supply.
Experts suggest rates could drop to the low 6% range by 2025 if economic conditions improve.[3]

U.S. Housing Market Slows Down; Supply Reaches Highest Level Since 2019

The real estate market is slowing, with homes taking longer to sell due to high mortgage rates and affordability concerns. As of late January, homes were taking an average of 54 days to go under contract—the slowest pace since early 2020.

Increased Supply: The U.S. now has 5.2 months of housing supply, the highest since early 2019, creating better conditions for buyers.
Declining Pending Home Sales: A 9.4% year-over-year drop in pending home sales suggests continued hesitancy among buyers.
Metro Area Trends: Pittsburgh’s median sale price jumped 19.3%, while San Francisco saw a 5.6% decline—the largest drop among major metros.
High Monthly Costs: The median monthly mortgage payment remains near record highs at $2,753.
Weather Impact: Extreme weather events, including snowstorms and wildfires, have also played a role in slowing real estate activity.[4]

As we move further into 2025, the U.S. real estate market remains in flux, with affordability concerns, fluctuating interest rates, and shifting supply dynamics shaping the landscape. Buyers and sellers will need to stay informed as market conditions evolve. Thank you for following our coverage of the latest real estate developments.

The Worst Housing Markets for Growth in the U.S.

U.S. Tariffs Could Impact Calgary’s Housing Market

Mortgage Rate Uncertainty: The Fed’s Next Move

U.S. Housing Market Slows Down; Supply Reaches Highest Level Since 2019

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