Extreme weather, high house prices and the 2025 housing market

The US housing market has been hit hard by extreme weather – from fires in Southern California to cold and snow in the Northeast, Midwest and South – at the beginning of the new year, in addition to the rising cost of the houses.

These factors dampened home tours and caused a drop in pending sales during the four weeks ending Jan. 12, according to real estate brokerage Redfin.

However, Redfin said it is still “too early in the new year to determine how the 2025 housing market will shape up.”

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Redfin’s Homebuyer Demand Index, which is a seasonal measure of tours and inquiries for other purchases services from agents Redfin, fell by 11% month on month, notching its lowest level since August.

A for sale sign is displayed outside a home for sale on August 16, 2024 in Los Angeles, California. (Photo by Patrick T. Fallon/AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images) / Getty Images)

Pending home sales fell 8.4% year-over-year, marking the biggest decline since October 2023. New listings had their biggest annual decline since September 2023, falling 3.6% on an annual basis.

Active listings rose 9.8% year over year, which was also the smallest increase in nearly a year, according to Redfin data.

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Meanwhile, the median housing payment in the country is also at its highest level in more than two months. House prices jumped 5.8% year over year and average daily mortgage rates also hit their highest level since May last week.

In California specifically, the demand for home purchases and listings in the Los Angeles metro has was amortized the cause to the fires that started earlier this month.

Homes burn as powerful winds drive the Eaton Fire on January 7, 2025, in Pasadena, California. (David McNew/Getty Images/Getty Images)

In turn, Redfin said there is increasing demand to buy and rent from those who have been displaced. Specifically, Los Angeles pending sales fell 4% year-over-year and new listings fell 2.5% during the four-week period ended January 12. Redfin does not believe that this fall would have been so great if the fires had not started.

Redfin also projects to see larger declines in the coming weeks.

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“Many Redfin agents are pivoting to help people find rentals as quickly as possible,” said Susan Brown, a Redfin Premier agent based in Los Angeles. “Because the rents go so fast, my advice for people looking for accommodation is to reach out directly to a real estate agent for help.”

A “for sale” sign in Crockett, California, on June 14, 2022. (Photo: David Paul Morris/Bloomberg via Getty Images/Getty Images)

Frigid temperatures and snow in other parts of the country are also keeping shoppers at bay. It also delays homeowners from putting their homes up for sale, according to the agency.