Homebuyer demand index fell 11%

Wildfires in Southern California, extreme winter weather across much of the US, and rising housing costs are weighing on the housing market, driving down homebuyer activity and pending sales, according to a recent report from Redfin.
Redfin's Homebuyer Demand Index, a measure of tours and inquiries for home-buying services, fell 11% from the previous month, reaching its lowest point since August 2024.
Pending home sales also dropped by 8.4% year-over-year for the four-week period ending January 12, 2025, marking the largest decrease since October 2023.
New listings were down 3.6% compared to the same time last year, showing the biggest annual drop since September 2023.
Rising housing costs are cited as a key factor in the decrease of pending sales. The median monthly mortgage payment has reached its highest point in over two months, and home sale prices have increased by 5.8% year-over-year.
In addition, daily mortgage rates have been at their highest level since May before dropping slightly following a consumer price index report showing softer inflation.
However, there are signs that could potentially stabilize the market. Mortgage rates decreased after the latest inflation data, and mortgage-purchase applications surged to their highest level in almost a year.
This uptick in applications suggests that pending sales could improve in the coming weeks. Experts caution that it is still too early to predict the direction of the housing market for 2025.
The situation in Los Angeles, where wildfires have displaced many residents, has caused a dual impact on the housing market. While pending sales and new listings have fallen, there has been an increase in demand for rental properties. Real estate agents report an influx of inquiries from individuals whose homes were destroyed by the fires.
Susan Brown, a Redfin Premier agent in the area, noted the high level of stress and urgency among those looking to find new homes.
“Many Redfin agents are pivoting to helping people find rentals as soon as possible. Because rentals are going so fast, my advice for people searching for housing is to directly reach out to a real estate agent for help,” said Brown.
In the Northeast and Midwest, harsh weather conditions, including snow and extreme cold, have further slowed the housing market, with many prospective buyers staying home and fewer homeowners listing properties.
How do you think the current housing conditions will affect the market in the upcoming months? Share your thoughts in the comments.