December Housing Market: Positive Surprises Amid Seasonal Challenges
January 21, 2025
In the latest HomeSphere/BTIG State of the Industry survey, December's housing market showed stable sales trends and positive surprises in traffic and performance, despite challenges from higher interest rates and seasonal slowdowns.
In December, 28% of builders reported positive year-over-year sales trends (similar to November's 27%), while 29% saw negative trends (up from 26%). More builders exceeded expectations, with 31% reporting better-than-expected sales (up from 25%) and 22% reporting worse-than-expected sales (down from 30%). These are the most positive results since spring 2024.
Base price increases continued for the fourth consecutive month, while the percentage of builders offering more incentives decreased to 27% (from 25%).
Regionally, California showed strong performance, while Minnesota and Pennsylvania were more bearish. Results were mixed in Florida, Georgia, and Arizona, while South Carolina and Texas remained stable.
Bottom line: Builders anticipated buyer hesitancy due to high interest rates and seasonality but were pleasantly surprised by stable traffic and sales.
The latest NAHB/Wells Fargo Housing Market Index (released January 17, 2025) increased a point to 47.
Highlights from the latest State of the Industry Report
Sales and traffic. Overall, builders reported similar sales trends relative to November, though traffic trends were more negative. 28% of respondents reported year-over-year increases in sales orders, up from 27% sequentially, but 29% saw a year-over-year decrease in orders in December vs. 26% in November. 31% of builders reported an increase in year-over-year traffic at communities while 31% saw a decline vs. 35% and 28%, respectively, last month.
Sales and traffic relative to expectations. Business relative to expectations improved smartly in December compared to November. 31% of respondents saw sales as better than expected (25% in November), and 22% saw sales as worse than expected vs. 30% last month resulting in a change in the better-minus-worse spread to +9 from -5 and the highest spread since April 2024. 31% of builders saw traffic as better than expected, and 20% saw traffic as worse than expected (a better-minus worse spread of +11), the highest since March 2024. This compares to 21% better and 28% worse last month (a spread of -7).
Base pricing and incentives. The level of builders who decreased base prices in December compared to November was lower; builders who increased incentives rose month-over-month. 22% of builders reported raising either "most/all" or "some" base prices, up from 21% last month; 18% reported lowering "most/all" or "some" base prices, down sequentially. 7% reported decreasing "most/all" or "some" incentives, the highest level since May 2024.
Regional color / interest-rate drop impact. While the small number of responses per state often makes us reticent to reach conclusions about specific markets, we note that CA builders were almost uniformly positive on their market. MN and PA builders reported weaker conditions. See Exhibit 8 for anecdotal builder commentary, which is widely-dispersed this month, with a number of builders commenting on strong December trends while others noted extremely slow conditions.
HomeSphere/BTIG State of the Industry Report
HomeSphere partners with the global investment bank BTIG to create a monthly report to provide our builders and manufacturers with exclusive and timely insights about the market.
To compile the report, we survey HomeSphere’s 2,700+ regional and local home builders about sales, traffic, pricing, labor costs and other key industry metrics.
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