Cooling Inflation, Rising Inventories Boost 2025 Outlook
Cooling inflation, slowing home price growth, an expected rise
in home sales, and growing home inventories are key trends to watch in the near
future. High prices coupled with frothy borrowing costs have been challenging
the sector, but there could be a light at the end of the tunnel.
Inflation, as measured by the Fed's favorite gauge, the Core
Personal Consumption Expenditures, just recently fell to a four-year low, due
in part to eased supply chain issues, moderated demand from high interest
rates, and declining financial services costs. This lower rate also reflects
favorable base effects, meaning this year's smaller price increases look even
smaller when compared to last year's unusually large spikes. For the consumer,
the price of gas at the pump has declined, and while not an inflation problem,
egg prices have fallen dramatically from the high prices seen in late January
and early February.
Slowing inflation tends to boost bond prices and push home
borrowing costs lower.
In its May Home Values and Sales Forecast Report, Zillow reports
that home values are projected to fall by 1.4% this year, revised up from the
previous expectation of a 1.9% decrease. Home values are declining in specific
areas, particularly in the Sun Belt, but national prices are still trending
upward, albeit more slowly, a positive for housing.
On the supply front, the National Association of REALTORS® (NAR)
reports that total housing inventory registered at the end of April was 1.45
million units, up 9.0% from March and 20.8% from one year ago (1.2 million).
Unsold inventory sits at a 4.4-month supply at the current sales pace, up from
4.0 months in March and 3.5 months in April 2024. With increased supply, buyers
have more options and time to decide, though they have not been as active as
they typically are during this time of year.
Bright Outlook for 2025: Existing
home sales are expected to climb to 4.12 million units in 2025, marking a
promising 1.4% increase from 2024, according to the NAR, even if slightly lower
than the prior forecast of 4.2 million. Zillow highlights that a growing
housing supply, reduced policy uncertainty, and gradual improvements in
affordability are paving the way for a stronger, more vibrant home sales
market, offering hope and opportunity for buyers and the housing sector alike.
Source: Mortgage Market Guide
Team Lasson is here to assist with
all of your home buying needs! If you’re
considering taking the leap into home ownership in the near future, we’re here
to help. Contact us today to explore
which loan program aligns best with your financial goals.
The first step in preparing for your big purchase is to get
pre-approved for a mortgage at Lake of the Ozarks. Visit www.yourlakeloan.com or
call us at (573) 216-7258 to get started today!
Michael Lasson
Senior Mortgage Banker
NMLS #: 493712
Flat Branch Home Loans – Team Lasson
2882 Bagnell Dam Blvd
Lake Ozark, MO 65049
Cell: (573)
216-7258
Email: teamlasson@fbhl.com
Website: www.yourlakeloan.com
**The
postings on this site are my own and do not necessarily represent Flat Branch
Home Loans positions, strategies, or opinions.
Flat Branch Home Loans
NMLS 224149. A Division of Flat Branch Mortgage Inc.
For more licensing
information, visit NMLSConsumerAccess.org
