Redfin Reports Housing Supply Hits Highest Level Since 2020, But Demand Falls to Lowest Level Since 2020

Rhea-AI Summary

Redfin (NASDAQ: RDFN) reports that housing supply has reached its highest level since 2020, while demand has dropped to pandemic-era lows. Pending home sales fell 4.2% month-over-month and 6.3% year-over-year in January, marking the largest decline since August 2023. Meanwhile, active listings rose 12.9% year-over-year.

The typical home spent 56 days on the market, the longest for any January since 2020. The median home sale price increased 4.1% to $418,581. Higher mortgage rates (6.96% in January), economic uncertainty, and increased deal cancellations (14.3% of contracts) are contributing to decreased demand. Supply growth is attributed to the fading mortgage rate lock-in effect and slower sales.

Regional variations show significant differences, with pending sales rising in coastal markets like San Jose and Seattle while declining in pandemic boomtowns like Miami and Austin.

Positive

• Active listings increased 12.9% year-over-year
• New listings reached highest level since July 2022, up 4.7% year-over-year
• Median sale price grew 4.1% year-over-year to $418,581
• Price growth has stabilized to pre-pandemic levels of 4-5% annually

Negative

• Pending home sales dropped 4.2% month-over-month, largest decline since August 2023
• Existing home sales fell 1.7% in January
• Mortgage rates increased to 6.96%, highest since May
• Home purchase cancellations reached highest January rate since 2017 at 14.3%
• Days on market increased to 56 days, longest for any January since 2020

Insights

Real Estate Market Analyst

The January 2025 housing market data signals a significant rebalancing phase, with supply and demand dynamics shifting toward pre-pandemic patterns. Active listings increased 12.9% year-over-year, while the return to normal 4-5% annual price growth suggests a healthier, more sustainable market compared to the double-digit increases of 2021-2022.

Regional variations tell a compelling story about market evolution. Coastal markets like San Jose and Seattle are showing resilience with increasing pending sales, while pandemic boomtowns such as Miami and Austin face declining activity. This divergence reflects a potential reversal of pandemic-era migration patterns and could reshape investment opportunities in these markets.

The 14.3% cancellation rate - the highest January level since 2017 - combined with longer days on market (56 days) indicates a shift in negotiating power toward buyers. This market correction is particularly evident in pricing dynamics, with some markets like Tampa and Austin experiencing price declines, while others like Pittsburgh and St. Louis show robust growth above 13%.

The normalization of price growth to pre-pandemic levels, despite continued inventory constraints, suggests the market is finding a new equilibrium. This balance between supply and demand could provide more stable and predictable conditions for both buyers and sellers, though regional variations will likely persist based on local economic factors and migration patterns.

The typical home that sold sat on the market for 56 days—the longest of any January since 2020

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Homebuyers have the most options since 2020, but few are biting because rising housing costs have made monthly payments tough to swallow. That is according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Pending home sales in January fell to the lowest level on record aside from the start of the pandemic. They dropped 4.2% month over month—the largest decline on a seasonally adjusted basis since August 2023—and 6.3% year over year.

Meanwhile, active listings of homes for sale rose to the highest level since early in the pandemic. They climbed 0.3% month over month on a seasonally adjusted basis in January and 12.9% year over year. New listings hit the highest level since July 2022, increasing 1.9% month over month and 4.7% year over year.

Housing supply (listings) is increasing for a few key reasons:

• The mortgage rate lock-in effect is fading. A lot of homeowners who scored ultra-low mortgage rates during the pandemic have been staying put because moving would mean taking on a higher rate. But most people can’t stay put forever.
• Homes are lingering on the market. The typical home that sold in January was on the market for 56 days. That’s a week longer than a year earlier, and marks the longest period for any January since 2020.
• Demand is slowing. Listings are also piling up because there are fewer people buying homes. Existing home sales fell 1.7% in January to a seasonally adjusted annual rate of 4.3 million—the largest monthly decline since October 2023.
• Housing demand (sales) is decreasing for a few key reasons:
• Mortgage rates hit an eight-month high. The average interest rate on a 30-year-fixed mortgage was 6.96% in January, up from 6.72% a month earlier and the highest level since May. Plus, the median home sale price rose 4.1% from a year earlier to $418,581. That’s 45% higher than the January before the pandemic.
• Deals are falling through. Home purchases were canceled at the highest January rate in records dating back to 2017. Roughly 41,000 home-purchase agreements were canceled, equal to 14.3% of homes that went under contract last month. That’s up from 13.4% a year earlier.
• Economic uncertainty. Tariffs. Reductions in the federal workforce. Return to office mandates. Mortgage rate uncertainty. A lot is up in the air for a lot of Americans right now, and Redfin agents report this is giving buyers (and sellers) cold feet.

“I’m seeing a lot more inventory hit the market than I have in past years, but it’s not nearly enough,” said Charles Wheeler, a Redfin Premier real estate agent in San Diego. “Economic fears have been top of mind for people. I have sellers saying, ‘I think we're at the top of the market—I’m ready to cash out and put my money into another investment.’ Buyers should know that they have a bit more negotiating power because there are more homes hitting the market. Sellers should know that since buyers have more negotiating power, they should make sure their home is polished and competitively priced if they want to sell it quickly.”

It’s worth noting that price growth is roughly back to where it was before the pandemic, growing 4%-5% a year, as opposed to the double-digit increases seen in 2021-2022. That’s in part because supply and demand is more balanced; the housing shortage has slowly improved as more listings have come on the market. Still, prices continue to climb because, as Wheeler said, there still aren’t enough homes for sale.

“On a national scale, we’re seeing an increase in people selling homes and decrease in people buying homes, bringing supply and demand closer to equilibrium. But the national snapshot masks a lot of regional variation,” said Redfin Senior Economist Elijah de la Campa. “For example, pending sales are rising from a year ago in expensive coastal markets like San Jose and Seattle, and posting double-digit declines in pandemic boomtowns like Miami and Austin. In Newark, active listings are near an all-time low, but in San Antonio, they’re near a record high.”

Winter storms in January may have also impacted sales in some areas.

January 2025 Housing Market Highlights: United States

	January 2025	Month-over-month change	Year-over-year change
Median sale price	$418,581	-2%	4.1%
Existing home sales, seasonally adjusted annual rate	4,279,856	-1.7%	2.4%
Pending home sales, seasonally adjusted	455,163	-4.2%	-6.3%
Homes sold, seasonally adjusted	423,038	-3.1%	0.1%
New listings, seasonally adjusted	564,642	1.9%	4.7%
Total homes for sale, seasonally adjusted (active listings)	1,795,951	0.3%	12.9%
Months of supply	3.6	0.9	0.3
Median days on market	56	6	7
Share of homes sold above final list price	22.4%	-1.9 ppts	-1.7 ppts
Share of homes that went off market in two weeks	30.6%	6 ppts	-2.2 ppts
Average sale-to-final-list-price ratio	98.2%	-0.3 ppts	-0.2 ppts
Pending sales that fell out of contract, as % of overall pending sales	14.3%	-1.4 ppts	1.0 ppt
Monthly average 30-year fixed mortgage rate	6.96%	0.24 ppts	0.32 ppts

Metro-Level Highlights: January 2025

• Prices: Median sale prices rose most from a year earlier in Pittsburgh (15.4%), St. Louis (13.2%) and Anaheim, CA (13.1%). They fell in four metros: Tampa, FL (-4%), Austin, TX (-3.7%), San Francisco (-2.2%) and Jacksonville, FL (-1.3%).
• Pending sales: Pending sales rose most in Portland, OR (11.4%), San Jose, CA (8.2%) and Milwaukee (4.7%). They fell most in Detroit (-19.2%), Miami (-18.1%) and Atlanta (-17.4%).
• Closed home sales: Home sales rose most in Portland, OR (12.8%), Providence, RI (10%) and Boston (9.9%). They fell most in Detroit (-11.3%), Miami (-9.4%) and Fort Lauderdale, FL (-8.2%).
• New listings: New listings rose most in Seattle (30.8%), Oakland, CA (27.7%) and Sacramento, CA (25%). They fell most in Kansas City, MO (-11.2%), Detroit (-9.1%) and Pittsburgh (-8.4%).
• Active listings: Active listings rose most in Oakland (31.1%), Seattle (29.1%) and Cincinnati (28.1%). They fell in six metros, with the largest declines in New York (-3.9%), Newark, NJ (-1.9%) and Chicago (-1.5%).
• Sold above list price: In Newark, 56.7% of homes sold above their final list price, the highest share among the metros Redfin analyzed. Next came San Jose (52.7%) and Nassau County, NY (49%). The lowest shares were in West Palm Beach, FL (5.5%), Fort Lauderdale (5.9%) and Miami (7.5%).

To view the full report, including charts, please visit: https://www.redfin.com/news/home-sales-fall-supply-rises

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, and title insurance services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve approximately 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250213227630/en/

Contact Redfin

Redfin Journalist Services:

Ally Forsell, 206-588-6863

press@redfin.com

Source: Redfin

FAQ

What caused the drop in RDFN pending home sales in January 2025?

The drop was primarily due to high mortgage rates (6.96%), increased home prices, and economic uncertainty, leading to a 4.2% month-over-month decline in pending sales.

How much did housing inventory increase for RDFN in January 2025?

Active listings rose 12.9% year-over-year and 0.3% month-over-month on a seasonally adjusted basis, reaching the highest level since 2020.

What was the median home sale price reported by RDFN in January 2025?

The median home sale price was $418,581, representing a 4.1% increase from the previous year.

What percentage of RDFN home purchase agreements were canceled in January 2025?

14.3% of home purchase agreements were canceled, representing approximately 41,000 deals and marking the highest January cancellation rate since 2017.

Which RDFN markets showed the strongest and weakest pending sales performance?

Portland (11.4%), San Jose (8.2%), and Milwaukee (4.7%) showed the strongest growth in pending sales, while Detroit (-19.2%), Miami (-18.1%), and Atlanta (-17.4%) showed the largest declines.