DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1532176
65 February 2025 J O U R N A L February 2025 » regions, where housing inventory has nearly returned to pre-pandemic levels, the Case-Shiller Index shows markets like Tampa (+0.39%), Denver (+0.44%), and Dallas (+0.85%) with less than a percentage point of year-over-year price growth. Meanwhile in the Northeast and Midwest, markets like New York (+7.27%) and Chicago (+6.24%) are driving the national-level price growth. Home builders have taken notice of this trend and are throttling back con- struction in the South while pushing it forward in the Northeast." Berner continued: "Purchasing a home is especially difficult right now because of high mortgage rates. These high rates gum up the gears of the housing market, leading to fewer sales and more modest price appreciation like the Case-Shiller Index showed today. For savvy and equity-rich buyers, though, this provides an opportunity to take advantage of relatively weak prices and an ever-growing set of options. Buyers without the ability to self-finance, especially first-time buyers who don't already have equity in a home they could sell, will continue to struggle to find opportunities even as prices moderate. First-time buyers or existing owners looking to make a move would do well to target some of the markets we feature in our Top Housing Markets for 2025, which highlights several Southern and Western metros where we expect sales and prices to pick up in the coming year." The U.S. National Index showed a 0.3% month-over-month increase after seasonal adjustment, and the 10-City and 20-City Composites both showed 0.3% monthly increases. S&P Dow Jones Indices U.S. Analysis The three composites' housing boom/bust peaks and troughs, present values, and percentage changes from the peaks and troughs are as in the chart below. "New York once again reigns supreme as the fastest-growing housing market with annual returns over double the national average," said Brian D. Luke, CFA, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. "Two markets have dominated the top ranks, with New York leading all markets the past six months and San Diego the six months prior. New York is the only market sitting at all-time highs and one of just three markets with gains on the month. Accounting for seasonal adjustments shows a broader rally across the country." The markets have tracked and reported on the nonseasonally adjusted data set used in the headline indexes since the S&P CoreLogic Case-Shiller indexes were introduced in early 2006. S&P Dow Jones indexes release a sea- sonally adjusted data set for the headline indexes, 17 of 20 markets with tiered price indices, and the five condo markets it tracks for analytical purposes. "Our National Index hit its 17th consecutive all-time high, and only two markets—Tampa and Cleveland—fell during the past month," Luke said. "The annual returns continue to post positive inf lation-adjusted returns but are falling well short of the annualized gains experienced this decade. Markets in Florida and Arizona are rising but not keeping up with inf lation and are well off the over 10% gains annually from 2020 to the present. This has allowed other markets to catch up. "With the latest data covering the period prior to the election, our nation- al index has shown continued improve- ment," Luke continued. "Removing the political uncertainly risk has led to an equity market rally; it will be telling should the similar sentiment occur among homeowners." WILL HOME SALES INCREASE IN 2025? A ccording to Zillow's most recent market research, the erratic and abrupt changes in mortgage rates that had a significant impact on the housing market in 2024 will undoubtedly be a significant factor in the upcoming year. According to Zillow's estimate, a prediction of gradually falling mortgage rates in 2025 portends modest growth in both sales and home price appreciation. The second half of this year's home sales was boosted by a September decline in interest rates; Zillow projects 4.06 million sales in 2024. By 2025, that figure ought to increase somewhat to 4.16 mil- lion. In 2025, home prices are expected to increase by 2.2%, which is exactly in line with the 2.3% yearly growth that was noted in November. "There's a strong sense of déjà vu on tap for 2025," said Skylar Olsen, Chief Economist at Zillow. "We are once again expecting mortgage rates to get better gradually, and opportunities for buyers should follow, but be prepared for plenty of bumps on that path. Those shopping this winter have plenty of time to choose and a relatively strong position in negotiations." 2006 Peak 2012 Trough Current Index Level Date Level Date From Peak (%) From Trough (%) From Peak (%) U.S. 184.61 Jul-06 134.00 Feb-12 -27.4 % 142.0 % 75.6 % 20-City 206.52 Jul-06 134.07 Mar-12 -35.1 % 148.3 % 61.2 % 10-City 226.29 Jun-06 146.45 Mar-12 -35.3 % 139.2 % 54.8 %