Ahead of the rate decision today, Reuters reported that U.S. equity fund outflows slowed to $3.2 billion in the week ending Jan. 22, down from $8.26 billion the prior week, as expectations for a pause in rate cuts boosted equities. Large- and mid-cap funds saw reduced outflows, while sectoral funds recorded $2.74 billion in inflows, led by financials, industrials, and tech.
Charley Blaine of The Street reported earlier in the week that the Federal Reserve was expected to keep interest rates steady at 4.25%-4.5% during today’s announcement, despite President Trump’s push for a cut. Fed Chair Jerome Powell will likely address inflation and the timeline for potential rate reductions, anticipated no earlier than mid-2025.
Katherine Watt of CNET reports that mortgage rates are expected to remain around 7% as the Fed held interest rates steady at its policy meeting today. Despite President Trump’s push to lower rates and promises of 3%, bond markets primarily influence mortgage rates. Factors like strong economic growth, inflation concerns, and restrictive policies on trade and immigration continue to pressure rates. Experts predict no Fed rate cuts until late spring or early summer, keeping mortgage affordability at historic lows.
Source: CNET (January 2025)
Kara Ng of Zillow comments on the implications of higher interest rates for the foreseeable future: “While increasing inventory in 2025 should allow buyers more options and more negotiating power, elevated mortgage rates would continue to challenge affordability. Households priced out of financing a home may choose to rent longer, potentially putting upward pressure on single-family rents.”
Home sales
Nicole Friedman of the Wall Street Journal reports on home sales, highlighting that existing home sales dropped to 4.06 million in 2024, the lowest level since 1995, as high mortgage rates, record home prices, and rising homeownership costs continued to suppress the market. Average mortgage rates between 6% and 8% since late 2022 have made buying prohibitively expensive, while tight inventory has kept prices high. Despite slight monthly gains in late 2024, sales remain 20% below 2019 and a third lower than the 2021 boom.
Source: WSJ (January 2025)
Dana Anderson of Redfin reports that high mortgage payments have slowed sales volume. Median monthly housing payment rose to $2,686 as of mid-January, driven by a 7.04% mortgage rate and a 5% annual increase in median home-sale prices. High housing costs, extreme weather, and limited listings have contributed to a 10.1% annual decline in pending home sales, the steepest drop in a year. Homes take 52 days on average to sell, the longest in two years.
Source: Redfin (January 2025)
Skyler Olsen of Zillow reports on housing inventory, noting that it climbed in December 2024, offering buyers more options as the number of homes on the market approached pre-pandemic levels. National inventory rose 16.8% yearly, marking the highest December level since 2019, but remains 25% below 2018–2019 averages. Due to strong new construction activity, ten major metros, primarily in the South and Florida, now have inventory levels above pre-pandemic norms.
ATTOM Data Solutions released a report on home seller profits, finding that margins slid for the second consecutive year in 2024, even as the national median home price rose 5% to a record $350,000. Typical seller profits reached $122,500, yielding a 53.8% return on investment, down from 56.9% in 2023 and 61.9% in 2022. This marks the first consecutive decline in margins since the Great Recession. The drop reflects a mismatch between rising home prices and the higher purchase prices recent sellers initially paid.
Source: ATTOM (January 2025)
Mark Palim, Fannie Mae Senior Vice President and Chief Economist, comments:
“Due to the ongoing lock-in effect and affordability constraints, we currently expect another year of sluggish existing home sales. A silver lining for affordability is that we also anticipate income growth will outpace both home price and rent growth this year — and in many markets, new homes are now priced competitively with existing homes and are far more available. Otherwise, our expectation that home sales activity will remain limited, combined with the elevated rate environment, reaffirms our view that on a national level the 2025 housing market is shaping up to feel a lot like 2024.”
Proptech update
Several funding announcements were made in the past week, starting with Bedrock Energy, which has secured $12M in a Series A funding round led by Titanium Ventures, with participation from Energy Impact Partners, Sustainable Future Ventures, and others. The geothermal startup, founded in 2022, is revolutionizing geothermal heating and cooling for commercial real estate by reducing costs, space, and construction time through innovative technology. Bedrock’s systems cut HVAC energy costs by up to 50% while eliminating emissions
Rize, a Saudi PropTech company, raised $35M in a Series A round led by Raed Ventures. SEEDRA Ventures, Aqar Platform, and others participated, along with debt financing from Partners for Growth. Founded in 2021, Rize pioneered the “Rent Now, Pay Later” (RNPL) service in Saudi Arabia, enabling tenants to pay annual rent in flexible monthly installments.
Attentive.ai, a New Delhi-based AI SaaS platform for the construction and outdoor services industry, raised $12M in Series A2 funding, led by Tenacity Ventures and with participation from Vertex Ventures, Peak XV Partners, and InfoEdge Ventures. The funding will support the development of AI-powered products and expansion into additional construction trades.
Similarly, Kaya AI, a NYC-based construction supply chain intelligence platform, secured $5.3M in pre-seed funding led by 53 Stations, Suffolk Technologies, and Soma Capital, with support from Barclays Black Formation Investments, RXR, and others. The funds will fuel operations and product development for its AI-native platform, which eliminates data silos, integrates with existing workflow tools, and streamlines procurement tracking.
CRETI reports on the Trump administration’s real estate-focused executive orders, which signal significant opportunities for proptech firms, particularly in areas like automation, compliance, and alternative financing. Policies streamlining federal permitting and expanding Opportunity Zones could accelerate development timelines, driving demand for digital tools that optimize project management and site selection. Initiatives promoting public-private infrastructure projects may spur construction tech adoption, while support for alternative financing could broaden access to capital, fueling platforms for syndication and creative funding solutions.
Finally, JLL Spark’s 2025 PropTech forecast highlights sustainability, data center innovation, and AI as key drivers of transformation in commercial real estate in 2025. Proptech adoption will accelerate as property owners seek AI-driven solutions to cut costs, optimize operations, and enhance tenant experiences. Sustainability remains a primary focus, with technologies like IoT-enabled energy management and green building solutions gaining traction. The booming data center sector will spur startups focused on energy efficiency and alternative energy.