There’s always buzz about what direction home prices are headed, especially with 2024 shifting gears in some markets. I mean I get it, housing plays such a pivotal role in our lives.
To start the year here in Nashville, TN, we’ve seen inventory climb steadily month-over-month and home prices peak in April before coming back down.
You’ll see that home prices for single family homes in Nashville peaked in April and have come down since. This peak was earlier than normal, typically home prices peak in June/July.
Above, you have a the steady incline in inventory to begin the year. Now this makes sense because in the next chart, you’ll notice new listing inventory going up as well. However, check out what happens to new listings after April in the next chart.
You’ll notice that after April, new listings come down at a fairly generous pace. Well, if new listings went down in May and June, then inventory should’ve went down as well. Nope! This is because you have homes that continue to sit due to mostly, misaligned pricing.
So new listings that are priced appropriately, in good condition, and in good location are still selling at a healthy clip. It’s those houses that are not those things that sit and accumulate days on market, and build our total inventory number.
But what about the future of the market? While no one has a crystal ball, experts have released early predictions for home prices in 2025. Let’s check it out.
The Big Picture: National Home Price Predictions for 2025
It’s hard to believe 2024 is halfway over! Looking ahead to 2025, experts predict a slowdown in the national housing market’s rapid pace. Now, a slowdown doesn’t mean prices are plummeting. In fact, it doesn’t even mean that prices will decrease. The average expert’s forecast anticipates a +2.5% increase in national home prices for 2025. That would mark the 13th consecutive year of home price growth.
Projections vary among major groups, with predictions ranging from a 0.3% increase to 4.4%. The key takeaway? None of the experts predict a decline.
- Goldman Sachs: +4.4% growth
- Wells Fargo: +4.3%
- Mortgage Bankers Association: 3.3%
- Morgan Stanley: 3.0%
- Zelman & Associates: 2.3%
- Fannie Mae: 1.5%
- Freddie Mac: 0.5%
- Moody’s Analytics: 0.3%
It’s Not a One-Size-Fits-All Picture
While national trends provide a useful overview, real estate is inherently local. Nashville might not always follow the national average. Nashville is a unique and resilient market, thanks to the influx of people moving here and corporations continuing to bring new jobs. Also, local factors such as the labor market, inventory levels, and specific regional economic conditions will continue to play a significant role in shaping our housing market.
Nationally, areas with strong job growth and limited housing supply may continue to see higher price appreciation, while other regions may experience more modest gains or even slight declines.
Key Factors to Watch
Some of the key factors I watch every month include: (as of 7/4/24)
- Inventory Levels (1,717 single family homes)
- Interest Rates (7.03% – 30 year fixed)
- Average Days on the Market (38 days)
- Average Sale Price ($799,937)
- List-to-Sale Price Ratio (96.86%)
Keeping an eye on these metrics can provide insights into where the market is headed and help you make informed decisions whether you’re buying or selling.
One thing to note is the discrepancy between the average closed price versus the average active sales price. The current average closed single family home is at $799,937 and the average active sales price is $1,064,986. That’s a 33% difference between the two. This tells me that a lot of homeowners are throwing out ambitious numbers to see if someone will take it. Almost as if they’re saying, “make me move!” If this theory is true, that means there is a good amount of sellers that aren’t serious because they won’t get right with price. This then leads to the steady uptick in inventory that we’ve seen over the first half of 2024.
Final Thoughts
Understanding these trends and how they apply to your local market is crucial. Real estate is more than just numbers; it’s about making informed decisions that fit your life and financial goals. If you have specific questions or need personalized advice, simply reply to this email.
I understand that navigating the real estate market, what to do and what not to do, can feel overwhelming, but you don’t have to do it alone. If you’re curious about what these trends mean for you, let’s chat! Whether you’re buying and/or selling, I’m here to help you make the best decisions for your unique situation. Click here to get in touch or learn more about what’s happening in the Nashville market on my Instagram @bretthickey_nashville.