AriZona Real Estate insider!

The holidays usually mean a slowdown in the housing market, but this year felt different. According to HousingWire, mortgage applications took a major hit towards the end of December. Overall demand dropped by a significant 21.9%, with refinance applications plummeting by a whopping 36%. Purchase applications also cooled off, falling by 13%. With interest rates creeping higher, it seems like a lot of people decided to put their home buying or refinancing plans on hold.

Is this just a seasonal slump, or is something bigger going on?

Refinance applications absolutely plummeted, which makes sense because rates are so high. It seems like most people who could benefit from refinancing already have.

On the purchase side, things cooled off too. Higher rates definitely made people think twice about buying. It’s hard to say if this is just temporary holiday hesitation, or if people are genuinely worried about the economy and are holding back on big purchases.

What about government loans?

It was interesting to see that while FHA loans dipped, VA loans actually increased. This might tell us something about the different situations of different borrowers.

So, what does all this mean for 2025?

A lot depends on what happens with interest rates. If they stabilize or even start to come down, we could see a rebound in both refinancing and home buying. But if rates keep climbing, things could get pretty tough for the housing market.

We also need to keep an eye on how many homes are actually available for sale. If inventory stays low, it could continue to put upward pressure on prices, making things even harder for buyers.

The bottom line:

The housing market is definitely facing some headwinds right now. It’s going to be a year of uncertainty. Hopefully, things will start to stabilize, but it’s important to be prepared for a bit of a bumpy ride.