Redfin‘s Home Price Index (HPI) for December 2024 revealed an 0.4% monthly increase in U.S. home prices, down from 0.5% in November. On a year-over-year basis, home prices were up 5.4% from 2023, and the brokerage said that similar growth is expected in 2025.
The report measures the prices of homes that sold during a specific period. It also studies individual homes and compares how these prices have changed since the homes were previously sold.
According to Redfin, the year-over-year increase in December was the smallest annualized increase since 2015 and the second smallest since 2013. Redfin senior economist Sheharyar Bokhari believes that prices will continue to rise in 2025, an opinion shared by many industry observers.
“Prices will keep going up consistently because it’s unlikely there will be enough new inventory to meet buyer demand,” Bokhari said in the report. “We expect there will be slightly more sales this year, largely due to pent-up demand, but there won’t be enough of an increase in listing activity to put significant downward pressure on prices.”
The metro-level data tells a slightly different story. Redfin reported that 15 of the country’s 50 most populous metro areas recorded seasonally adjusted declines in home prices from November to December. The sharpest decline occurred in Tampa, Florida, where home prices declined 1.3%. It was followed by Atlanta (-0.9%) and Miami (-0.7%). Conversely, the highest gains during the month were in Pittsburgh (+1.9%), Cleveland (+1.5%) and St. Louis (+1.3%).
Nassau County, New York, experienced an increase of 14.63% over the past year, leading all metros for home-price growth. Detroit came in second with annualized growth of 13.32%.
Across the housing industry, other data providers observed price growth at the end of last year. Fannie Mae‘s latest HPI report highlighted a 1.7% quarterly increase in home prices in the fourth quarter of 2024. Fannie Mae’s index showed that prices increased 5.8% from Q4 2023 to Q4 2024.
Home sales also took a hit due to high prices. Recent data from Altos Research found that buyer activity ramped down as mortgage rates reached 7%.
“Buyer activity has been dropping for several weeks and there are now fewer homes in contract than a year ago. Both the weekly new contracts and all the homes in the contract pending stage are below last year,” Altos Research founder Mike Simonsen said in the report.
According to HousingWire‘s Mortgage Rates Center, rates are well above the 7% mark, so sales are unlikely to turn on a dime. HousingWire’s 2025 market forecast predicts 5% growth in existing-home sales this year and “slight easing” of mortgage rates.
Home-price forecasts are slightly more optimistic. HousingWire predicts that appreciation will “slow, but not turn negative in 2025,” rising 3.5% during the year. Real estate portal Zillow forecasts home-price growth of 2.2% in 2025, alongside 100,000 more home sales. Meanwhile, Fannie Mae’s 2025 forecast predicts that conditions won’t deviate much from 2024.
