As 2025 begins, the housing market is showing signs of transition. Active listings hit their highest level since 2020 late last year, but a growing number of homes failed to sell, lingering on the market as expired or “stale” listings. These trends highlight deeper shifts in how the market is functioning—and they’re worth understanding whether you’re a buyer or a seller.

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Rising Inventory, But Not Enough Movement

In November 2024, active listings were up 12.1% year over year, according to Redfin. On the surface, that sounds like good news for buyers. However, the data reveals that more than half of these homes remained on the market for at least 60 days without going under contract—the highest share for November since 2019.

So, why aren’t these homes selling?

• Overpricing: Many sellers are setting prices too high, based on the market frenzy of past years rather than today’s cooling conditions.

• Presentation Issues: Homes that aren’t move-in ready, or those lacking quality marketing, are struggling to compete.

This mismatch between what buyers want and what’s available is creating a buildup of unsold inventory.

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The “Lock-In Effect” and Its Impact on Supply

The inventory picture is further complicated by what’s known as the “lock-in effect.” With over 80% of homeowners holding mortgages below 6%, many are choosing to stay put rather than face higher monthly payments if they sell and buy another home at current rates.

This has kept the supply of existing homes tight, limiting options for buyers and placing even more importance on new construction.

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New Construction: A Bright Spot for Buyers

Builders are responding to affordability challenges by focusing on smaller, more efficient homes. Since 2015, the median size of newly completed homes has decreased by 14%, making these properties more accessible to first-time buyers.

Incentives like mortgage rate buydowns and flexible financing options are also helping to drive new-home sales, which are projected to grow by 9% in 2025. If you’re a buyer, exploring new construction could open up opportunities that aren’t available in the resale market.

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Expired Listings Are on the Rise

At the same time, we’re seeing a surge in expired listings—homes that didn’t sell during their original listing period. Many of these properties suffered from poor pricing strategies or inadequate preparation for market conditions.

This is a trend I’m paying close attention to, as it signals a need for sellers to rethink their approach. In today’s market, pricing strategically and presenting your home in its best light are non-negotiable.

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What This Means for 2025

The current market is challenging, but it’s not without opportunities:

• For Buyers: The rise in inventory—while uneven—creates negotiating power, especially on homes that have been sitting. New construction also offers more affordable options.

• For Sellers: Success in this market depends on aligning with buyer expectations. Homes that are competitively priced and professionally presented are still selling quickly, even as the overall market slows.

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Insights for the Year Ahead

What we’re seeing is a market in transition. Price appreciation is slowing, inventory is rising, and affordability remains a key issue. But these shifts are creating opportunities for those who are well-prepared and informed.

I’ve spent decades navigating dynamic markets, and the lessons are clear: in real estate, strategy matters. Whether you’re planning to buy, sell, or relist a home that didn’t sell in 2024, understanding these trends is the first step to making confident decisions in 2025.

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If you’re considering a move or need guidance navigating the market, I’d be happy to discuss how you can achieve your goals this year. Reach out anytime for a conversation—or explore my resources for buyers and sellers looking to succeed in today’s housing market.

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