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In this exclusive series on Inman, Windermere’s Principal Economist Jeff Tucker illuminates the latest stats, reports and numbers to know this week.
This week the numbers to know are all about inventory as a leading indicator for the 2025 market.
Number to know: 25%
We now have over a full month of data to see how 2025 is shaping up, and I wanted to focus today on one of my favorite leading indicators: inventory.
So the first number to know this week: 25 percent. That’s how many more active listings there were this January compared to January 2024. For a sense of scale, it was about 829,000 active listings this year, compared to only about 666,000 active listings last year. And in fact, we are now only 13 percent below January 2020 levels, on the eve of the pandemic. That’s a huge milestone the housing market is approaching, after really being defined by low inventory for the last few years.
Now, there’s a ton of data in this graph, which makes it a little hard to read, so I’ll try highlighting a couple sections at a time:
Here’s what happened early in the pandemic: Inventory plunged, first because sellers weren’t even sure about selling in the early pandemic, and then because demand actually took off, fueled in part by lower interest rates as well as booming demand for more space and maybe the chance to work from home.
So ultimately, just over a year later, by May 2021, for instance, we had 62 percent fewer active listings than in May of 2019. That helped fuel some extraordinary price appreciation and really frenzied competition in the market for about a year.
Then, in mid-2022, interest rates shot up from record lows of around 3 percent, above pre-pandemic levels, to the highest in a generation. This helped put the brakes on homebuyer demand for a while, slowly helping inventory build back up toward normal levels, and that’s almost where we are today.
Now, what does higher inventory really mean? It should restore some balance to the market between buyers and sellers, dampening home price appreciation, helping homes sell a little slower on average, and giving buyers more variety of choices and a little more negotiating power. All of that means the market is shaping up to be a little friendlier for buyers this spring.
Pending sales have risen just 2 percent from the same time last year, showing that the home-purchase surge in Q4 of 2024 has not really continued into the new year. That surge was driven by lower interest rates, so it’s perhaps not surprising to see it peter out now that interest rates are back up around 7 percent.
The second number to know this week: 3%
That’s the inflation rate in January, as measured by the year-over-year change in the Consumer Price Index. As a reminder, the Fed is aiming for inflation of just 2 percent, so this figure is still running a little too hot. This is just one data point, but stubborn inflation is one reason why the Federal Reserve did not opt to cut its short-term interest rate at its most recent meeting.
Last number to know this week: A little less than 7%
That’s where interest rates have moved recently, giving a little bit of relief to homebuyers but still probably feeling a bit high for many folks. I think some gradual further declines are possible but certainly not guaranteed, and really big declines seem especially unlikely any time soon.
Jeff Tucker is the Principal Economist for Windermere Real Estate in Seattle, Washington. Connect with him on X or Facebook.
