Single-family rentals (SFR) are fueling rent growth across the country as homeownership remains challenging due to significant upfront costs and unpredictable mortgage rates.
The asking rent for a typical single-family home was $2,174 in December, according to Zillow data. That’s up 4.4% from last year and 40.6% over the past five years. By comparison, multifamily rents grew just 2.4% from last year and 26.2% over the past five years, according to Zillow’s data.
“As of December, single-family rents were 20% higher than multifamily rents, which is the greatest disparity between these two subsets since Zillow began tracking this data in 2018,” the report said.
The winter market is heating up, with existing-home sales posting their largest annual increase since June 2021. Here are the latest housing indicators to watch for your business.
Home sales are making a notable turn, posting the largest year-over-year increase in more than three years. Existing-home sales—completed transactions that include single-family homes, townhomes, condos and co-ops—jumped 9.3% annually in December and were up 2.2% month-over-month, the National Association of REALTORS® reported Friday. The increase is offering hope that the housing market can finally put 2024 to rest—a year marked by the lowest level for existing-home sales in nearly 30 years.
“Home sales in the final months of the year showed solid recovery despite elevated mortgage rates,” says NAR Chief Economist Lawrence Yun. “Home sales during the winter are typically softer than the spring and summer, but momentum is rising with sales climbing year-over-year for three straight months.” Yun points to recent job and wage gains, along with a rising number of homes for sale, as helping fuel the recent sales increases.
Home Prices Still Rising
Homeowners may be feeling even richer as home prices continue to increase. The median existing-home sales price rose 6% in December compared to a year ago, NAR reports. Despite decreases in sales over the year, median home prices have remained resilient, surging to a record high in 2024 of $407,500.
The higher-end market may be the main culprit. “The median home price was elevated partly due to the upper-end market’s relative better performance,” Yun says. Sales increased by 35% from a year ago for homes priced above $1 million, while sales fell for homes priced under $250,000.
The uptick in home prices, however, is proving problematic for first-time home buyers who don’t have the ability to leverage the equity from a current home for a home purchase. First-time buyers did increase slightly in December, comprising 31% of sales, up from 29% in December 2023, NAR notes. But NAR reports have shown the annual share of first-time home buyers fell to its lowest ever on record in 2024, as many were priced out.
On the other hand, existing homeowners and investors are leveraging more cash in their real estate transactions. All-cash sales grew to a 28% share in December, NAR reports.
Sellers Face More Competition
The inventory of unsold existing home listings is up 16% compared to a year ago, offering more choices for home shoppers and greater competition for home sellers. Unsold inventory is at a 3.3-month supply at the current sales pace.
Builders are also ramping up the construction of new single-family homes, adding to inventory levels.
“Single-family home building increased 6.5% for 2024, as builders added more supply in a market continuing to face a housing affordability crisis due to elevated mortgage interest rates and higher construction costs,” says Carl Harris, chairperson of the National Association of Home Builders. “Industry experts expect to see a slight gain for single-family home building in 2025 because of a persistent housing shortage and ongoing solid economic conditions.”
Buyer demand remains high. As such, existing-home sales continue to sell in about a month. Fifty-three percent of real estate professionals reported in December that their listings sold in less than a month, according to the REALTORS® Confidence Index. Overall, properties typically remained on the market for an average of 35 days in December 2024, up from 29 days a year earlier.
Mortgage Rates Remain a Wild Card
The 30-year fixed-rate mortgage eased slightly this week, averaging 6.96% after rising to 7.04% last week—the first time rates crossed the 7% mark since last May, Freddie Mac reports. Rates above 7% did put the brakes on mortgage applications for home purchases as home buyers revisited what they could afford, but that did improve slightly as rates fell below 7% this week.
Yun anticipates that mortgage rates may move slightly lower in the coming months, “perhaps to 6.5% just in time for the spring homebuying season.”
Regional Breakdown
Existing-home sales rose in three of the major regions of the U.S. last month, led by the Northeast. The Midwest was the only region to post a slight decrease. Nonetheless, sales and home prices have accelerated year-over-year in all four regions.
Here’s a closer look at how existing-home sales fared across the country last month:
- Northeast: Existing-home sales rose nearly 4% in December compared to November 2024, reaching an annual rate of 530,000. Sales are up 10.4% from December 2023. Median price: $478,900, up 11.8% from last year.
- Midwest: Sales fell 1% in December to an annual rate of 990,000. Sales are up 6.5% compared to the prior year. Median price: $298,600, up 9% from December 2023.
- South: Existing-home sales rose 3.2% from November, settling in at an annual rate of 1.93 million in December. Sales are up 9% from a year earlier. Median price: $361,800, up 3.4% from a year ago.
- West: Sales increased 2.6% in December to an annual rate of 790,000. Sales are up 12.9% from a year ago. Median price: $614,500, up 6% from a year earlier.
Source: nar.realtor
