With the holidays approaching, many people are wondering if home prices will drop this December.
Here’s what experts think:
In the past, finding a low mortgage rate was easier, but things changed after the pandemic.
The Federal Reserve raised interest rates, causing mortgage rates to go up.
For years, mortgage rates were under 4%, but now they’ve risen to over 7%, making home loans more expensive.
At the same time, home prices went up because there weren’t enough houses for sale, and more people wanted to buy.
Good news for buyers: mortgage rates started going down before the Fed’s September meeting, and rates have dropped a bit since then.
This is making home loans more affordable for some people.
But should buyers expect prices to fall this month? Experts have mixed opinions.
Will Prices Drop in December?
December is usually a slower month for home buying, with fewer houses for sale and some prices being lowered.
“This can lead to a small dip in prices,” says Rashi Malhotra, a real estate agent.
Many buyers pause their search during the holidays, waiting for a better deal.
However, some experts think prices won’t drop much. “New listings are priced to match current market conditions, not lower,” Malhotra explains.
And some experts believe that more people will be buying homes this December than expected.
Even though homes may have lower listing prices, it doesn’t always mean they will sell for less.
Broker Jennifer Roberts points out that sometimes a lower price leads to more buyers, causing a bidding war that ends with a higher final sale price.
Sellers May Hold Off on Lowering Prices
Not all sellers are eager to lower their prices in December.
Some think buyers are distracted with the holidays, so they may wait to adjust their prices.
Other sellers may decide to temporarily take their homes off the market for the holidays, shrinking the number of available homes and possibly raising prices for the remaining properties.
Why Prices May Stay High
There’s still a big problem in the housing market: too many buyers and not enough houses.
Domenick D’Andrea, a financial advisor, explains that this supply-and-demand issue may cause homes to continue selling for over the asking price.
Many homeowners also have lower mortgage rates than what’s available today, so they don’t want to sell unless they really have to.
This keeps fewer homes on the market and could prevent prices from dropping.
What’s Likely to Happen Next?
Experts predict that home prices might go up by 2% to 4% in 2025.
However, this can vary depending on where you live.
Some areas, like the Northeast, may see home prices stay strong, while others, like the Sun Belt, may see prices soften.
The bottom line?
Waiting for home prices or mortgage rates to fall could leave you missing out on a chance to buy a home.
Instead of hoping for prices to drop, it’s better to focus on improving your finances and being ready to make an offer when the right home comes along.