January 2025 Mortgage Market Update: What New York First Time Home Buyers Need to Know

For first-time homebuyers in New York, navigating today’s housing market can feel like an uphill battle. Between fluctuating mortgage rates, a shifting economy, and limited inventory, it may seem overwhelming to figure out whether it’s the right time to buy—and how to make the most of your budget. Thankfully, knowledge is power! Let’s dive into the current mortgage market as of January 27, 2025, breaking down everything you need to know, from mortgage rate trends to the regional housing market.

Current Mortgage Rate Trends

Mortgage rates remain elevated as we close out January 2025, with interest on 30-year fixed conventional loans averaging 7.11%. If you’re considering shorter-term options with lower interest rates, 15-year fixed mortgages are sitting at 6.54%, while VA loans for veterans are slightly higher at 6.55% accoridng to Mortgage News Daily’s Mortgage Rate Index.

It’s worth noting that adjustable-rate mortgages (ARM), like the 7/6 ARM, hover at 6.94%, accoridng to Mortgage News Daily’s Mortgage Rate Index offering some buyers a more budget-friendly entry point into homeownership. However, rates above 7% for fixed-term loans make affordability a key consideration for first-time buyers.

Historically, mortgage rates have been climbing steadily since mid-2024. For context, rates have risen a full percentage point since August 2024, making this one of the most expensive times to borrow in years. While no dramatic fluctuations are expected in the short term, mortgage rates seem “sticky,” remaining in a tight range.

Economic Indicators Impacting Mortgage Rates

A handful of key economic reports this week could influence mortgage rates. Here’s what’s in the spotlight:

• New home sales report (January 27)
• Consumer confidence and FHFA House Price Index (January 28)
• Federal Reserve Press Conference and statement (January 29)
• GDP and jobless claims updates (January 30)
• Personal income and expenditure data (January 31)

One major factor to watch is the Federal Reserve. As it decides whether to hold or change the federal funds rate during its meeting on January 29, 2025, mortgage rates could adjust accordingly. However, market consensus shows a 99.5% expectation that the Fed will keep rates steady between 4.25% and 4.5% for now according to CME Data’s Fed Watch 

Long-term projections indicate a possible decrease in the federal funds rate, but those changes might not come until later in 2025, meaning high mortgage rates could be here to stay for several more months.

Seasonal Effects on the Mortgage Market

Winter months are traditionally slower in the housing market—and December 2024 was no exception. According to local data, inventory levels dropped significantly during the holiday season due to seasonal trends and elevated interest rates:

• Nassau County: Active listings fell from 2,969 in November to 2,459 in December.
• Queens: Active listings declined from 5,408 in November to 5,038.
• Suffolk County: Inventory dropped from 3,765 in November to 3,166.

Fewer homes on the market create increased competition for buyers, especially with some homeowners reluctant to sell due to the “golden handcuffs” of their lower mortgage rates (often under 3%) from previous years. Many are opting to hold off on selling until rates decrease—a timeline that remains uncertain.

Regional Housing Market Overview

For New York first-time homebuyers, regional trends add another layer of complexity. Here’s a quick breakdown of December 2024 median home prices compared to the previous month:

• Brooklyn: Up from $978,000 in November to $1,000,000 in December (+2.2%).
• Nassau County: Increased from $760,000 to $799,000 (+5.1%).
• Suffolk County: Rose slightly from $635,000 to $650,000 (+2.4%).
• Queens: Decreased from $718,000 to $705,000 (-1.8%).

While Brooklyn, Nassau, and Suffolk saw price increases, Queens saw a second consecutive month of declining prices, presenting a potential opportunity for buyers targeting that area.

Additionally, sales activity varied regionally:

• Nassau County and Brooklyn saw notable increases in closed sales from November to December.
• Queens and Suffolk County experienced slight decreases in closed sales during the same period.

Despite higher-than-usual home prices, seasonal market patterns typically reset by spring, meaning more activity to come.

Federal Reserve and Market Expectations

The Federal Reserve remains a key player in shaping the housing market. As of January, most analysts expect the Fed to hold steady with the current rate of 4.25–4.5%, with over 97% of market participants projecting no rate changes during the January 29 meeting.

Projections for the remainder of 2025 show potential rate decreases towards the end of the year. For example:

• By September 2025, market sentiment is split evenly, with one-third of analysts expecting rates to drop to 3.75%.
• However, predictions for right now suggest the Fed will maintain current policies, aiming to stabilize the economy without overcorrecting.

For first-time buyers, the takeaway is clear: plan for current borrowing costs, and don’t bank on immediate relief in interest rates.

Conclusion and Key Takeaways

If you’re a first-time homebuyer in New York, here are the key points to focus on in January 2025:

• Mortgage rates remain elevated, averaging 7.11% for 30-year fixed loans and 6.54% for 15-year loans.
• Federal Reserve policy is holding steady, with no short-term changes expected in the federal funds rate.
• Seasonal slowdowns in inventory limit options, but Queens offers slightly more affordable opportunities.
• Spring could bring market activity to life, meaning now is the time to prepare your finances and explore pre-approvals.

As always, buying a home is a deeply personal decision, and it’s important to align any market activity with your long-term goals. Meeting with a financial advisor or mortgage specialist can help you navigate the challenges of January’s market and put you in a position to succeed when the time is right.

Stay informed, stay prepared—and happy house hunting!

Want to dive deeper into mortgage options or personalized home-buying strategies? Contact us today to make your dream of homeownership come true!