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75 February 2025 J O U R N A L February 2025 » tax rate of 0.79%, saw its median tax payments rise to $1,750 in 2024. Home prices in North Carolina have grown 13.9% annually, outpacing neighboring states like South Carolina and Virginia. The Impact on Affordability For prospective buyers, property taxes represent an essential component of overall housing costs. Originators must account for property tax estimates when calculating debt-to-income (DTI) ratios, a critical factor in determining mortgage eligibility. Higher taxes can therefore affect borrowers' ability to qualify for a home loan. The analysis notes that low tax rates don't always guarantee lower tax increases, as rising property values can offset tax rate advantages. This dy- namic is evident in Colorado and other rapidly appreciating markets. Slowing Price Growth Ahead Despite the rising expenses, home sales continued at a steady pace through 2024, sustaining moderate home price growth. CoreLogic reported a deceleration in appreciation rates, with home prices largely plateauing since mid-year. Economists predict further slowing in 2025 and 2026 as elevated mortgage rates and four years of rapid appreciation curb demand. Markets in the Southeast and Texas have already begun to soften, ref lecting broader trends of slowing price growth. Research from Milliman, a consulting firm, indicates that slowing apprecia- tion has also increased the default risk for conventional purchase mortgages, with delinquency rates rising to 2.12% for loans acquired in Q3 2024. As property taxes and other costs of homeownership continue to climb, affordability challenges are likely to persist. For policymakers and industry stakeholders, addressing these issues will be crucial to ensuring sustainable homeownership for millions of Amer- icans. PENDING HOME SALES FALL TO 24-MONTH LOW P ending home sales fell 4.5% month over month in December on a seasonally adjusted ba- sis—the largest decline since October 2022—and dropped 2.3% year over year, according to a new report from Redfin. Homebuyer demand dipped at the end of the year as mortgage rates continued to climb. After inching downward at the beginning of the month, mortgage rates reversed course halfway through December and have been rising since—in part because the Federal Reserve projected fewer 2025 interest-rate cuts than anticipated. According to Freddie Mac, 2024 closed out with the 30-year fixed-rate mortgage (FRM) at 6.91% and has risen above the 7% mark, currently sitting at 7.04%. This marks the highest level for the FRM since May 2024, after hitting an early December low of 6.6%. Home purchases fell through at the highest December rate on record, which likely contributed to the decline in pending sales. Nearly 40,000 home-purchase agreements were canceled in December, equal to 16.2% of homes that went under contract that month. That's the highest December percentage in records dating back to 2017 and is up from 15.1% a year earlier. "Homebuying activity will likely slow further in January due to the wildfires impacting Los Angeles—the nation's second most populous metro area—and winter storms impacting the Mid-At- lantic and Southeast," Redfin Senior Economist Elijah de la Campa said. "Rent prices, on the other hand, may tick up as people who have been displaced by the fires seek alternative housing." Existing Home Sales Rise to Two- Year High While pending home sales rose to 24-month highs in December, the nation's existing-home sales followed suit and rose 0.7% month over month in December to a seasonally adjusted annual rate of 4,317,683—the highest level reported since February 2023, and a 6% year-over-year jump—the largest annual increase since July 2021. According to Redfin, a seasonally adjusted annual rate is not a measure- ment of actual total sales for the year, but rather, the pace of sales at a given time. A seasonally adjusted annual rate of 4,317,683 in December means that existing-home sales would end the year at that level if homes were sold at the December pace for each month of 2024. For the full year of 2024, actual exist- ing-home sales came in at 4,189,268— roughly in line with 2023. Overall home sales, a metric that includes sales of both existing and new- ly built homes, rose 1.9% month over month on a seasonally adjusted basis— jumping 9.3% year over year, the largest annual gain reported since June 2021. "Homebuyers pumped the brakes when mortgage rates ticked back up and are now in wait-and-see mode," said Jesse Landin, a Redfin Premier Real Estate Agent in San Antonio. "Ev- eryone is just trying to figure out when rates are going to come down again. In the meantime, a lot of house hunters are opting to rent." Homes Sold at the Slowest Decem- ber Pace in Five Years The study also found that the typical home that went under contract in December was on the market for 49 days—the slowest December pace since 2019. That's up from 43 days a year earlier. Just 25.1% of homes went under contract within two weeks—the lowest share in five years. That's down from 28.4% in December 2023. Home Prices Post Largest Gain in Nearly a Year The median U.S. home sale price increased 6.3% year over year to $427,670 in December, the biggest annual gain since February. Prices continue climbing because there's