How Extreme Weather and Rising Costs Impact the 2025 Housing Market
The housing market in 2025 faces significant challenges, with extreme weather and rising home prices slowing activity across the United States. From wildfires in California to freezing temperatures in the Northeast and Midwest, these conditions have disrupted home tours, pending sales, and new listings early in the year.
Declining Homebuyer Demand
According to Redfin’s Homebuyer Demand Index, which measures home tours and buying requests, demand fell 11% in the four weeks ending January 12. This marks the lowest level since August. Pending home sales dropped 8.4% compared to the same period last year, the steepest decline since October 2023. Additionally, new listings saw a 3.6% annual decrease, the largest drop since September 2023.
Despite these challenges, active listings rose by 9.8% year over year, but this was the smallest increase in nearly 12 months.
Rising Costs Add Pressure
Nationwide, the median housing payment reached its highest level in over two months as home prices climbed 5.8% year over year. Mortgage rates also hit their highest point since May, further discouraging buyers.