High rates don't slow the market down – this time

Home sales activity surged in December 2024, according to the latest Bright MLS market report.
Closed sales reached 17,593 transactions, marking a 14.4% increase from December 2023. The strong finish helped push annual sales 2.5% above the previous year’s levels.
Buyers showed renewed enthusiasm even as high mortgage rates continue. In November and December, average mortgage rates stayed at 6.75%.
"Buyers have re-anchored their expectations and have come to terms with the new normal for rates," said Bright MLS chief economist Dr. Lisa Sturtevant.
Over the past year, rates have regularly been above 7%, and even close to 8%, so buyers might perceive a rate in the mid-6s as acceptable, Sturtevant added.
Inventory, however, remains a problem. In December, there were just 11,531 new listings, down 2.1% from a year earlier and representing the slowest listing activity in 20 years.
Total active listings did climb to 30,823 at year-end - an 11.7% rise from 2023 - but remain well below where they were before the pandemic.
Much of the problem can be blamed on the "rate lock" effect, which holds that the current homeowner has little incentive to surrender his/her lower mortgage rate to secure a new loan at higher rates.
Philadelphia
In the Philadelphia metropolitan area, sales totaled 5,110 in December, which was up 9.0% from last year.
Meanwhile, the median sold price in the region was up 5.7% year over year, which is the slowest pace of home price appreciation since August 2023. New listings reached a 20-year low, with only 3,485 properties coming to market.
Baltimore
The Baltimore region showed a lot of resilience, with December sales reaching 2,518, up 12.3% from last year. The median sold price was $385,000, up 8.5% from last year - the largest annual increase since March 2024.
New listings fell 5.0% year-over-year to 1,617, also a 20-year low.
Washington D.C.
Activity in the Washington D.C. metro area continued to be a highlight, with 3,858 home sales - 25.9% above December 2023 levels.
The median sold price of $590,000 was 6.1% higher year-over-year; single-family home price appreciation grew faster than in townhomes and condos.
New listings in the area declined by 4.1% year-over-year to a record low level for over 20 years at 2,126.
Looking ahead to 2025, Sturtevant projects a little easing of market conditions. More inventory would come in the form of younger homeowners - especially those who are in their 30s and 40s - ready to sell on account of either family or jobs.
Mortgage rates, meanwhile, are also forecast to be in the mid-6% range, which could be a prompt for buyer activity in early 2025.
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