February 2025 Residential Market Update Highlights for the Kansas City Region

Median Sales Price Growth Remains Strong

In February, the median sales price for existing homes continued its positive year-over-year trend with a 6.7% increase. Although this was lower than January’s 11.9% rise, it still demonstrates considerable strength. Historically, the median sales price tends to hit its annual low point in January and February, and this year is following a similar pattern.

Listings Affected by Severe Weather

February listings declined by 7.8% compared to last year, primarily due to several snowstorms and extremely cold temperatures. Additionally, this decline follows a notably strong February 2024, which had a significant 30% increase over February 2023, making some decrease understandable. Aside from a minor dip of 0.15% in November, this marks the first substantial year-over-year decline in more than a year. As we approach the traditionally busy spring market, listings should increase, although comparisons to previous years might continue to show weakness.

Contracts and Closings Experience Declines

Contracts written in February dropped by 3.95%, representing the largest decline seen over the past year and slightly exceeding December’s decrease of 3.85%. A consistent pattern has emerged: about one month after experiencing a notable increase in new listings, contract numbers also rise. This pattern highlights ongoing demand when attractive properties become available, underscoring supply and demand dynamics. Closings in February also decreased by 4.49% compared to 2024, reflecting weaker contract activity in recent months, with negative trends in two of the past three months and only a modest 1.54% increase in January. Given these trends, substantial increases in closings over the next few months are unlikely.

Days on Market Indicate Shifting Trends

Days on Market (DOM) continues its upward trajectory compared to the same month in previous years. The chart below shows each month from January 1999 through March 2025, comparing DOM to the same month of the previous year. Green indicates a decrease in DOM compared to the previous year, signifying a faster market, while red indicates an increase, suggesting a slowing market.

An analysis from January 1999 through March 2025 reveals four distinct market cycles:

• January 1999 - March 2000: Homes sold increasingly quickly.

• April 2000 - February 2012: DOM consistently increased, except for two short periods (January-June in 2005 and 2010). The peak occurred in February 2010, with an all-time high DOM of 108 days.

• March 2012 - June 2022: Homes generally sold faster, aside from a brief three-month increase in 2019. The lowest February DOM (27 days) was recorded in 2022, just as the market began shifting.

• July 2022 - Present: While many perceived a shift starting in 2023 or 2024, data clearly indicates the change began in July 2022. February 2025 saw homes selling in an average of 47.9 days. Although this is a significant increase compared to 27 days in February 2022, it remains the fifth-lowest DOM for February since 1999. The four fastest February months on record occurred in the past four years.

  
  

Previous market cycles lasted approximately ten years each. We are now three years into this new cycle, and we anticipate a more volatile market characterized by shorter cycles lasting 3-6 months, alternating between increasing and decreasing DOM periods, until a clearer trend emerges.

Potential Challenges Ahead

Several national factors could influence our local housing market:

• Tariffs & Construction Costs: Could higher tariffs negatively impact new home construction and renovation projects?

• Mortgage Rates: Despite recent declines, rates remain around 6.75%, impacting affordability.

• Recession Concerns: Even if interest rates decrease due to recession fears, the housing market could still be adversely affected. Higher unemployment, underemployment, or foreclosure rates during a recession could lower home-buying demand while potentially boosting rental demand.

Kyle NiemannEngel & Völkers Kansas City(913) 900-0001