Sacramento Housing Market Kicks Off 2025 with Predictable Trends
The Sacramento real estate market started 2025 as expected, following typical seasonal trends. January saw a 20% increase in new pending sales compared to December, which is standard as the market begins to wake up from the holiday slowdown. However, compared to January 2024, the increase was only 3%, suggesting that buyers are still waiting for more favorable mortgage rates before making a move.
One encouraging sign was the surge in new listings. A total of 1,967 resale homes hit the market in January, marking a massive 108% increase from December and a 26% increase from the same time last year. More homes on the market mean more options for buyers, and this trend is expected to continue into the spring selling season. By the end of January, the market had about two months’ worth of available inventory—a number that is still low but moving in the right direction for prospective buyers.
Home Prices and Market Trends
The average home price for closed sales in January was $646,000. While this was a slight 4% dip from December, it still represented a 4% increase from January 2024. Historically, home prices tend to peak in the summer, remain steady through early fall, and soften towards the end of the year. However, experts believe that 2025 could see a faster-than-usual recovery in sales activity.
Pat Shea, President of Windermere Signature Properties, shares an optimistic outlook: “Yes, sales activity and prices typically dip in winter, but we expect a faster recovery this year. If mortgage rates drop to between 6% and 7%, buyers will jump off the sidelines, and sellers will be more motivated to list their homes.”
Entry-Level Market Challenges
The demand for entry-level homes (priced below $500,000) remains strong. As of January 31st, the number of homes available in this price range was nearly unchanged from December. However, standing inventory in this category is 50% higher than it was a year ago, offering more opportunities for first-time buyers. Despite this, supply remains tight, with only 1.5 months’ worth of homes available based on the current sales rate.
“New listings are critical to keeping the housing market healthy,” Shea explains. “First-time buyers and move-up buyers are the backbone of our entire housing ecosystem.”
What to Expect Moving Forward
By mid-February, new pending sales had already jumped 25% compared to January 15th, signaling that buyers are eager to move forward with their real estate plans. However, the number of new listings was 7% lower than in January, which could put pressure on inventory levels as spring approaches.
“Clearly, buyers and sellers are still engaging in the market despite challenges like low inventory, rising prices, and higher mortgage rates,” says Shea. “Conditions will continue to improve throughout the year, but waiting too long could mean paying more for less home. Sellers should consider listing now while inventory remains limited and buyer activity is picking up.”
As Sacramento’s housing market gears up for spring, all eyes will be on mortgage rate trends and inventory levels. If rates soften, we can expect a surge in buyer activity, making this a crucial time for both buyers and sellers to make their moves.
