The housing market has been atypical over the past few years, with yearly sales declines and increasing prices. This seems contrary to economic theory, and one would assume that declining sales would lead to the same for home prices. Even more unusual is that this has been the state of our local housing market for the past several years, as sales of home sales in 2022 and 2023 posted steep declines. Now that the pandemic is further behind us and the election is over, what does the housing market look like going forward?  

Many economists predicted home sales for 2024 would rebound after two years of sales declines. They also prognosticated that mortgage rates would be lower during the year based on the Federal Reserve’s hint to lower the Federal Funds Rate to fight inflation. When the Federal Funds rate is lowered or increased, it can affect mortgage rates similarly.  

In Boone County, 2024 started out promising, with a big jump in sales during the first quarter of the year. However, as the year continued and mortgage rates climbed, while the Fed delayed rate cuts, sales declined through late spring and into summer as mortgage rates topped 7.5 percent for a 30-year fixed-rate mortgage (FRM), according to Mortgage News Daily. The election also potentially slowed sales towards the end of summer and the fall, even though mortgage rates were at their lowest point of the year, near 6.15 percent.  

Looking forward to 2025, national predictions are that home sales will rebound during the next two years, with sales up 9 percent in 2025 and another 13 percent the following year. The prediction comes as market home inventory levels have increased in recent months. The increased market inventory provides buyers with more choices of available homes. The rising inventory has resulted from slower sales and life events such as growing families and employment opportunities. 

These events are starting to force “rate-locked” homeowners to sell, while others will take advantage of the equity they have built up in recent years to upgrade their homes. Interest rates are also predicted to be lower in 2025. This could also spur rate-locked homeowners to sell and provide a better entry point for first-time homebuyers to purchase.   

In Boone County, we may only see a slight increase in home sales in 2025. After the election, I hoped to see some pent-up home-buying demand unleashed, creating momentum for home sales heading into this year. Despite that, with mortgage rates around 7 percent, homebuyers don’t seem very eager to come off the sidelines just quite yet.  

Boone County has also not seen the same market inventory increase that has been created nationally. The inventory is slightly above 2023, but not much, which could frustrate home buyers. I’m also not as confident in mortgage rates going much lower than 7 percent for a 30 year FRM. Before the Fed announced rate cuts, mortgage rates did dip a bit, but quickly after, they shot back up by over 7 percent.   

I may seem pessimistic about the 2025 housing market, but I think our local market is behind the national market. There will be a slight increase in sales next year, and prices will continue to rise at a more moderate rate of 4 to 6 percent. Also, with all the local talk of creating more affordable housing, I hope Columbia and Boone County will take action to create more development opportunities and help our low inventory numbers later in 2025 and into 2026.  

Brian Toohey is the chief executive officer for the Columbia Board of REALTORS.