Indiana housing outlook: Will 2025 bring more of the same?
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Hoosiers interacting with the 2024 housing market likely encountered much of the same narratives that have become commonplace in the post-COVID landscape—high mortgage rates and a historically low number of listings leading to a moderate increase in prices.
Despite that, preliminary data from the Indiana Association of Realtors shows home sales in 2024 dipped only half a percentage point from 2023, with roughly 76,000 homes closed on.
IAR CEO Mark Fisher predicts 2025 will see much of the same in Indiana.
“It was a tough year for our members because of those constrained supplies and elevated prices. Depending on where interest rates go this year, we may see something similar in 2025,” Fisher said.
The two biggest factors Fisher looks at in prognosticating are inventory and affordability. As Indiana’s population has grown, the housing supply hasn’t kept up, especially in central Indiana. That’s reflected in IAR data, which shows almost 93,500 new listings in the state in 2024, up slightly from 2023; but those two years are the only this century where there have been fewer than 100,000 new listings.
“Has home building kept pace with that population growth, where the big job investments are happening and with the population shifts? We want to see more supply come on the market to match that population growth and that demand,” said Fisher.
Integral to the low number of new listings is what’s know as the “lock-in” effect. Since the majority of people selling houses will go on to buy another house, homeowners who purchased their houses many years ago at low mortgage rates are often unwilling to sell and take on a higher mortgage in their new house.
Per the IAR, 75% of American homeowners have a mortgage rate below 5%. According to Freddie Mac’s website, the average 30-year mortgage in the U.S. for the first week of January was 6.91%
Even if mortgage rates were to come down, Fisher speculated that the lack of available homes would mean a larger group of buyers competing for the same number of houses, meaning prices likely wouldn’t come down.
One sign of good news for buyers is a slight increase in homes on the market. The IAR says approximately 12,500 homes were listed for sale on a typical day in 2024, up from 11,000 average daily listings in 2023.