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Key Takeaways

• National Association of Realtors data showed that the housing market gained momentum in December. However, annual existing home sales were at their lowest since 1995.

• The late-year improvement showed positive trends that some economists think could continue into 2025.

• The optimistic outlook comes as mortgage rates continue to trend toward 7%, showing that homebuyers may be starting to accept the higher borrowing costs.

Momentum in the housing market may have ramped up in December, but existing home sales finished the year muted as buyers were put scared off by high prices.

Existing home sales totaled 4.06 million last year, according to data released Friday by the National Association of Realtors. That was the lowest total since 1995. One factor pressuring sales was median home prices, which reached a record $407,500 in 2024, NAR said.

According to Freddie Mac's calculations, 30-year fixed mortgage rates remained mostly above 6.5% throughout the year, compounding affordability problems in the market.

“We expect that last year marked a low point for existing homes sales and anticipate that recent momentum will extend into 2025,” wrote Wells Fargo Economists Charlie Dougherty, Jackie Benson and Ali Hajibeigi.

The three economists are more optimistic about the home market in the new year as both buyers and sellers have had the benefits of a solid labor market and wage gains in recent months. This could push them back into the market despite concerns about higher rates, economists said. Meanwhile, NAR data showed that the number of homes on the market in December was up more than 16% from the same time a year earlier.

“This could be a sign that buyers and sellers may be coming to terms with a higher interest rate environment as the 30-year fixed mortgage rate has backed up to around 7%,” wrote BMO Senior Economist Priscilla Thiagamoorthy.

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