• A sizable uptick in home inventory has brought down prices, giving buyers leverage.
• Fierce bidding wars that were common during the pandemic may be over for now.
• Here are 14 top US cities for buyers as 2025 begins, according to Realtor.com.

A slow year in the US housing market ended on a high note for buyers, and they might have even more luck landing new homes in the new year.

Property prices slid again in December in a less competitive market with steadily rising supply, according to Realtor.com's final housing market report for 2024, which was released in early January.

Median single-family home prices were 1.8% lower last month than the year prior at a going rate of $402,502, the firm found. The median price per square foot did rise by 1.3% year-over-year, though researchers said that was largely because buyers targeted smaller, cheaper houses.

Those declines stem from a long-awaited surge in home supply. Property listings were up for the 14th month and by 22% over last December. The number of unsold houses, including those under contract, also jumped for the 12th consecutive month and by 17.5% from 2023.

Supply has risen, but not everything is rosy

But while buyers got the lower prices they'd hoped for, many still didn't sign on the bottom line.

December was the quietest month on the housing front in nearly two years. The typical home was on sale for 70 days, compared to 62 days in November and 61 days in late 2023.

The slump coincided with a recent surge in mortgage rates, which just reached levels not seen since July. Higher borrowing costs are a major barrier for many buyers, and they've also deterred would-be sellers who are reluctant to trade in inexpensive mortgages for costlier ones. And when lofty mortgage rates cap what buyers can spend, sellers are stuck with weaker offers.

"With higher rates taking a bite out of homebuying power, fewer new sellers are coming to the market this winter compared with this past fall," Realtor.com's Ralph McLaughlin wrote in the January 2 report.

That's not to say there's a sales drought, as pending listings were 7.4% higher last month than a year earlier. Still, homes under contract had risen 14.7% in November before the latest spike in mortgage rates, which suggests that losses in home affordability are hurting the market.

While rates are a headwind, Realtor.com's economists are still calling for sales growth this year. However, the firm's forecast is for 1.5% growth, which is far less than optimists have predicted.

"Though rates are significantly higher today than they were just a few months ago, our 2025 forecast shows that as both lower rates and time chisel away at the 'lock-in' effect that has held back sales this year, we should expect home sales to rise modestly by 1.5% in 2025," McLaughlin wrote.

14 cities that favor buyers

Those who made buying a house a New Year's resolution might not have as much trouble as they would have a year or two ago, though they'll still need to look in the right places.

Home inventory increased last month across all four US regions and in all but one of the nation's 50 largest metropolitan areas, but there were still massive discrepancies. For example, the South and West saw supply rise by roughly 25% versus about 7% in the Northeast.

Since buyers have more options, there isn't as much pressure on them to bite on deals. In turn, homes were for sale for longer in 92% of major markets last month. That stalemate drove 12.9% of sellers to cut their asking prices, which was slightly higher than the 12.7% in December 2023.

To help buyers secure deals, Business Insider reviewed Realtor.com's latest housing data and found 14 large US metro areas that had lower prices and listing growth of at least 10%. Below are those cities and their median listing price, price growth on an overall and per-square-foot basis, active listing growth, share of homes with reduced prices, and the growth in that metric.

1. Atlanta, Georgia

Median listing price: $399,950

Median listing price growth: -3.6%

Median listing price per square foot growth: -0.6%

Active listing growth: 38.3%

Price-reduced share: 16.2%

Price-reduced share growth: 3.2 percentage points

2. Austin, Texas

Median listing price: $498,500

Median listing price growth: -7.7%

Median listing price per square foot growth: -5.3%

Active listing growth: 13%

Price-reduced share: 16.1%

Price-reduced share growth: -3.9 percentage points

3. Dallas, Texas

Median listing price: $422,450

Median listing price growth: -2.9%

Median listing price per square foot growth: -0.3%

Active listing growth: 31.1%

Price-reduced share: 17.4%

Price-reduced share growth: 0 percentage points

4. Denver, Colorado

Median listing price: $577,350

Median listing price growth: -5.4%

Median listing price per square foot growth: -1.1%

Active listing growth: 41.9%

Price-reduced share: 24.1%

Price-reduced share growth: 11.5 percentage points

5. Jacksonville, Florida

Median listing price: $384,500

Median listing price growth: -5.7%

Median listing price per square foot growth: -2.2%

Active listing growth: 36.8%

Price-reduced share: 17.9%

Price-reduced share growth: 2.9 percentage points

6. Kansas City, Missouri/Kansas

Median listing price: $369,995

Median listing price growth: -7.5%

Median listing price per square foot growth: -1.2%

Active listing growth: 12.2%

Price-reduced share: 11.6%

Price-reduced share growth: 1.7 percentage points

7. Miami, Florida

Median listing price: $522,500

Median listing price growth: -9.9%

Median listing price per square foot growth: -6.6%

Active listing growth: 45.4%

Price-reduced share: 14.7%

Price-reduced share growth: 0.7 percentage points

8. Oklahoma City, Oklahoma

Median listing price: $309,950

Median listing price growth: -3.1%

Median listing price per square foot growth: -0.1%

Active listing growth: 28.4%

Price-reduced share: 15.2%

Price-reduced share growth: -2.6 percentage points

9. Orlando, Florida

Median listing price: $419,950

Median listing price growth: -4.3%

Median listing price per square foot growth: -2.4%

Active listing growth: 42.4%

Price-reduced share: 17%

Price-reduced share growth: 0.4 percentage points

10. Sacramento, California

Median listing price: $615,000

Median listing price growth: -1.6%

Median listing price per square foot growth: -0.5%

Active listing growth: 22.1%

Price-reduced share: 11.8%

Price-reduced share growth: 0.9 percentage points

11. San Antonio, Texas

Median listing price: $329,950

Median listing price growth: -1.7%

Median listing price per square foot growth: -1.9%

Active listing growth: 16.1%

Price-reduced share: 17.7%

Price-reduced share growth: -0.8 percentage points

12. San Diego, California

Median listing price: $964,725

Median listing price growth: -1.6%

Median listing price per square foot growth: -0.5%

Active listing growth: 41.2%

Price-reduced share: 10.9%

Price-reduced share growth: 0.2 percentage points

13. San Francisco, California

Median listing price: $889,500

Median listing price growth: -10.9%

Median listing price per square foot growth: -6.5%

Active listing growth: 14%

Price-reduced share: 7.9%

Price-reduced share growth: 0.4 percentage points

14. Tampa, Florida

Median listing price: $395,000

Median listing price growth: -6%

Median listing price per square foot growth: -5.5%

Active listing growth: 27%

Price-reduced share: 19.6%

Price-reduced share growth: -0.2 percentage points

• The infamous "lock-in" effect that's restricting home supply may be going away next year.
• Realtor.com's chief economist expects more homeowners to list their homes for sale in 2025.
• High levels of home equity and life changes will encourage home sales, Danielle Hale said.

2024 has been a tough year for homebuyers.

Affordability levels are still low with elevated home prices and mortgage rates. A huge jump in mortgage rates to around 6.8% today from under 3% in 2022 has also created a "lock-in" effect, where existing homeowners don't want to sell into a higher mortgage rate environment than when many of them bought — further limiting home inventory coming onto the market and sending prices soaring even higher.

There's reason to be optimistic, though. The US housing market will see more favorable buying conditions in 2025, according to Danielle Hale, chief economist at Realtor.com. Hale sees two trends that will help encourage existing homeowners to put their homes up for sale.

Existing homeowners have built up home equity

Existing homeowners have reaped big home equity gains in recent years thanks to rapidly rising home values.

Homeowners are also increasing their home equity by making monthly mortgage payments, as those who bought houses a few years ago have had the opportunity to make a sizable dent in their mortgage, Hale said. Homeowners with a smaller mortgage balance may be less sensitive to the higher interest-rate environment of today's housing market.

According to Lawrence Yun, chief economist of the National Association of Realtors, homeowners are feeling richer now thanks to the home equity they've accumulated over the last few years of dizzying home price increases. As a result, more listings are being put on the market.

Homeowners can put their home equity to work when they move and buy a new house.

"If they're using their home equity to make a move, that enables them to either be a cash buyer or take out a very small mortgage," Hale said. "That gives them a bit more flexibility in today's market."

Mortgage rates may become less important to buyers and sellers

Homebuying decisions can also be influenced by factors other than mortgage rates or home prices, according to Hale.

The more time that passes since a homeowner's initial purchase, the more likely it is that they'll have a life change requiring them to move, regardless of the cost of moving, Hale said.

People buy houses for reasons other than financial ones, Hale pointed out. Big life changes that could spur a move include a new job, retirement, marriage, or having children.

"All of these can be reasons that people might make a move even if the costs are more expensive to buy a home," Hale said.

Additionally, consumers might be getting accustomed to high mortgage rates, according to Redfin.

"Buyers realized mortgage rates may not drop below 5%, and probably not below 6%, in the near future," Mimi Trieu, a Redfin real-estate agent, said. Existing homeowners holding off on moving due to high mortgage rates may soon give up on waiting it out.

A more "buyer-friendly" housing market

These changes won't be immediate, but they will have a noticeable impact on the housing market, according to Hale. She believes that the housing market is trending in a more "buyer-friendly direction."

"It's going to take more time," Hale said of the lock-in effect. "But as it diminishes, that's going to free up more sellers."

Lower interest rates — and subsequently, lower mortgage rates — would certainly speed up the erosion of the lock-in effect, Hale said. However, even if mortgage rates hover around the 6% range in 2025, which is what Realtor.com expects, the lock-in effect will still fade.

Homebuyers could see a notable change by the end of next year, Hale predicted.

"In mid-2024, 84% of homeowners with a mortgage had a mortgage rate under 6%. We think that by the end of 2025, that share will be 75%," Hale said.

• Real-estate agent Dana Bull advises submitting home offers two days before Christmas.
• In general, buyers are distracted during the holidays, so it can be a good time to score a deal.
• Another good window of opportunity is the Fourth of July weekend.

If real-estate investor and agent Dana Bull was looking to expand her portfolio, she'd be putting in offers in late December — specifically, two days before Christmas.

December 23 is her "favorite day of the year to submit an offer," she told Business Insider. "I find that sellers are very interested in getting a deal done going into the holidays or going into this year."

Bull works in real estate in a variety of capacities: She's a licensed agent, does real-estate consulting and coaching, and is a seasoned investor who owns multi-family and single-family homes throughout Massachusetts.

She's learned that if you want to land a good deal on a property, timing matters.

"It's always a good time to be deal hunting during a distracted market," Bull said — and people tend to be distracted over the holidays. "Most people are just in coast mode, but if you're not in coast mode or if you can take yourself out of coast mode, this is such a great time."

Starting a negotiation a few days before Christmas is a good time for several reasons.

"In general, people are in good spirits, and sellers tend to feel a sense of relief if they receive an offer because they usually aren't expecting one," she said. "Christmas Eve puts a deadline to get things wrapped up with the negotiating and creates a sense of urgency."

She says she would avoid submitting an offer on actual holidays — "it's a bit rude and unrealistic to get a response" — but the days following Christmas are fair game. "I almost always submit an offer that week. It's a time of great reflection, and sellers are generally motivated to put a deal together so they can enter the new year with a plan in place."

The holiday window of opportunity is small. A couple of weeks into January, "it's like a light switch comes back on," she said, noting that mid-January is one of her busiest times of the year for consultations. "What I've noticed is this herd mentality where everybody just ebbs and flows at the same time, so if you can be flowing when everybody else is ebbing, this is when you can negotiate."

That said, "You don't want to make a bad purchase just because it's a good time of year," Bull added, but if you can carve out time to look for deals when most other investors aren't, you could be rewarded.

"There are always these pockets, like the Fourth of July is another great time where people have signed off, and I'm almost always working with somebody that weekend to try to scrounge something up."

Seasonal swings aren't a myth, and they can be significant. In her market, for example, "Massachusetts has huge seasonal swings in average pricing by like $100,000."

Regardless of your market, however, in the winter, "prices always come down," Bull explained. "And then they're going to start to climb. Then, in the summer they come back down again and they climb again in the fall. Every year it's the same quarterly trend, so if you are looking to buy a house, right now is one of the best times."