Introduction
I will say right here at the start that 2024 will go down in history as the bottom of the bottom of this down cycle. It will be up from here but slowly at first. After a few years of frenzies and bidding wars, 2024 was not as much of that, especially once we got past May. Inventory is finally increasing as more homes were listed in 2024 than in 2023, which was the bottom of the total amount of homes listed.
Last year in my 2024 Predictions, I predicted sales nationally would be up somewhere between 2-7% in 2024. It appears that they will be down around 1-3%. I debated this heavily with my senior advisor, Gerry Bourgeois, who thought sales would be down, and he was right, and I was wrong! I also predicted that prices will be essentially flat, landing somewhere between a 3% decrease and a 1% increase, and as they stand so far, they’ll be up by 4%. My prediction that 2024 would see rates in the 6%-7% range was correct, creating a sticker shock effect and keeping many sellers and buyers at bay this year. A brief decline in rates in late September/early October caused a fall market surge where sales were up in both October and November, but otherwise rates largely lived in this range.
Average Sales Price
We are all too familiar with how the frenzied demand since 2020 caused values to rise at a rapid rate, and though that rate of increase has slowed, the average sales prices are still increasing.
Below are charts that show average sale prices overall for all the states we serve.
Home Sales
Nationally speaking there are an average of about 5.3 million homes sales per year for the last 30 years. 2024 will land somewhere around 4 million maybe even a bit less. We see roughly the same decreases in the states we serve as well. Take a look at the graphs below and you can clear see the decreases in sales every year since the peak of 2021. We feel strongly that 2024 will be the low point of the sale cycle and that it’s likely up from here. Sales in the states in which we are licensed all experienced a decrease or close to no change in sales year over year. Buyers and sellers with life changes were largely perpetuating the market, but those who have been holding out will make their move in 2025, 2026 and beyond.
Rates
In September 2024 rates were the lowest they’d been since February 2023. This finally made borrowing more affordable than it has been in a year and seven months. This excitement was immediate and caused the fall 2024 market to kick off with some steam making October the first month in 37 months where sales were up year over year. Unfortunately, mortgage interest rates went right back up in early October.
Homes Listed
2023 saw the least number of homes listed in recorded history, so thankfully 2024 exhibited increases in all the states in which we serve with the exception of Connecticut which saw a nominal decrease. See charts below. As more and more homes continue to be listed in 2025, buyers will have more selection and less of a need to outbid one another and the rate of increase we have been seeing with prices over the past few years will start to slow down.
Anthony Lamacchia’s 2025 Predictions
We anticipate a transitional period with the change in presidential power, and as with most new administrations, the first few months could bring some turbulence. This may cause some chaos in the stock market, potentially leading to lower interest rates—a welcome development. Additionally, the new administration’s stance pushing fuel-friendly initiatives such as even more drilling in the US and renewing oil rig leases that have not been renewed in 4 years should result in lower fuel prices. The impact of lower energy costs will reduce inflation, subsequently lowering rates, which could encourage more buyers and sellers to enter the market and boost sales.
As rates lower and the number of homes for sale increases, we expect sales to rise. I predict sales will rise by somewhere between 5% to as much as 10% in 2025. While this won’t fully return us to pre-pandemic levels, it would be a significant step in the right direction. I believe 2025 will mark the beginning of this recovery, with 2026 poised to be a historic year for the industry as sales normalize.
Regarding pricing, I have to break my predictions apart because I expect big differences between what happens in New England and what happens in Florida.
In New England, I expect inventory to continue to rise, but it won’t rise enough for prices to fall at all. Historically, we still have lower-than-average inventory, so I expect modest growth in average sales prices of about 2-8% in 2025. Places like Rhode Island and Connecticut will be closer to the 8% range, and places like Massachusetts, New Hampshire, and Maine will be on the lower side.
As for Florida, and in particular South Florida, condo prices will be lower a year from now. Probably not substantially lower, but they will be at least 1-3% lower. Single-family homes will continue to hold strong and likely continue to experience some appreciation in pricing, but not as much as in 2024.
Lastly, I will make a longer-term prediction: 2026 to 2030 will be the biggest years real estate has ever seen, with more home sales than ever and strong price appreciation!
Happy Holidays and Happy New Year!
– Anthony Lamacchia, Broker/Owner/Founder, Lamacchia Realty
Note: Many of These 2025 predictions and observations apply nationally on many levels. Though real estate markets can vary from one local market to another, the majority of the overarching market trends are happening everywhere on a grander scale right now. For those reading these predictions outside of New England or South Florida, much of this will likely be applicable to your market unless you are in a unique place with outlying factors.