2024 Sacramento Real Estate Market Recap & 2025 Predictions

Happy New Year Sacramento. Let’s talk about what happened to Real Estate in 2024. Stick around to the end and I’ll share some predictions for 2025.

Overall, the 2024 market was good. Not great, just good. Sales started to pick up despite perceived higher interest rates. A lot more homes came on the market this year after several years of nothing moving.

We saw prices increase 5%.

The number of homes sold increased 19.9%

But wait, you heard prices are dropping right? That certainly was the headline certain media outlets hung onto – remember bad news sells.

It’s kinda true, but not really. The Average Active Price dropped 6.5% this year. What does that mean? That means there were a bunch of Sellers who didn’t listen to their Real Estate Professional because they “KNEW” better and overpriced their home.

Those price drops are the homes being reset to the actual market value. They are dropping from unrealistic or “Make Me Move” prices to reality.

That’s not a market dropping, that’s a reality check. Remember prices of homes that actually sold rose 5% this year.

New homes were where the activity was in 2024. We know a little about that since the majority of our business is new homes.

2024 saw the 7^th best sales year in history with just under 7,000 homes sold. The only 2 better years in the last decade were 2020 and 2021.

New homes were where many people found a bridge to affordability in 2024. Builders were offering interest rate buy-downs and other incentives to help people get into their new home.

It worked and new home prices were up about 8%

We’ve come off the brief craziness of 2020 and have had more tempered growth since then.

Honestly, I think we would’ve had an overly heated market the past few years with the high demand and low supply had rates not run up into more normal ranges like they are now.

That’s a good thing for the health of our market. It means we didn’t over build for the market, and we didn’t outstrip the market’s ability to afford a home.

While it is tougher to purchase a home today, Sacramento is still relatively affordable compared to other California markets.

Now what’s ahead for 2025

According to Fannie Mae, Consumer Sentiment was up 5.9 points from a year ago. People are cautiously optimistic, but that sentiment varies wildly across the country.

Always remember, real estate is local. Ignore national headlines when it comes to real estate. It’s what’s happening locally that matters.

I expect we will see us entering a slight recession within the next 9-18 months. I don’t see that being a housing recession, but the previous administration has caused too much economic damage to the markets for there not to be a pull back in consumer prices to get us back into balance. This is all normal and healthy for the market. I don’t expect this to have much affect on the local housing market, but it will temper price increases during this period. That helps more people get into the market as prices moderate and incomes increase.

There’s a lot of wild cards that will affect this and we don’t have a clear picture on how the new administration will handle fixing some of these economic issues. It’ll be a wait and see while the real estate market continues to grow moderately.

Mortgage rates are expected to ease slightly this year, but don’t expect too much. The consensus is we will be in the 6.4% to 6.2% by the end of the year. That’s about a ½ point drop from where we are now. Not a big shift. And they are not expected to drop to about 6% until the end of 2026.

As rates ease, more people enter in the market and prices continue to rise. Please don’t be the person that throws away tens of thousands of dollars in equity because you were waiting to “Save” money on your rate.

Given rates and the current supply/demand for Sacramento I would expect prices to rise similarly to 2024 – about 4%-6%.

Nothing is going to be overheated and you’re definitely not going to see giant deals. It’ll be a steady market moving forward and we’ll start to see some bigger increases going into ’26 and ’27.

If you’re ready, willing and able there’s no better time.

So, what are you going to do this year? I’d love to hear in the comments below.

Closing

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Please make sure to like this video, subscribe, and hit the notification bell so you never miss a market update. I’m Christopher Brown with NEXT Real Estate Group and Next New Homes Group. See you next month!