2024 had its ups and downs in the financial world. While inflation eased and savings accounts saw better returns, the car and real estate markets still posed challenges. It’s been a year of mixed results, with some relief for consumers but ongoing pressures in key areas.

As we look back, it's clear that 2024 has shaped the financial decisions we’ll make heading into 2025.

A glimpse of relief in inflation

One of the standout financial trends of 2024 was the easing of inflation. For the first time in three years, the Consumer Price Index (CPI) dipped below 3% in June. This milestone signaled some relief for consumers grappling with soaring costs.

However, the broader picture remains complex. While price increases slowed, the overall cost of living continues to be a financial strain on many households.

Looking ahead

The potential introduction of new and higher tariffs – and the impact of this action – remains an unknown.

2024 offered a mix of progress and lingering challenges in the fight against inflation. As we move into 2025, consumers and policymakers will need to navigate potential shifts in pricing pressures.

New cars are still very expensive

There’s been some relief in the car market. New car inventories started to return to pre-pandemic levels in 2024, providing more options and reducing price pressures. Automakers also reintroduced incentives like cashback offers and low APR financing. But the average prices are still higher than most consumers want to spend. In July 2024, car buyers paid nearly $48,000 on average, according to data from Edmunds.

Looking ahead

The car market in 2025 could go in several directions, depending on a few big factors. Proposed tariffs on imported vehicles and parts might increase prices for new and used cars. While auto loan interest rates started to drop in 2024, their future depends on broader economic trends and Federal Reserve decisions. Another wildcard is electric vehicle tax credits — if these are reduced or cut entirely, EVs could become less affordable, potentially slowing their sales. It’s a mixed bag, and buyers will need to keep an eye on these developments as they unfold.

High-yield savings accounts offered strong returns

Savers enjoyed a rewarding year in 2024 as high-yield savings accounts and certificates delivered elevated interest rates. Even as the Federal Reserve implemented rate cuts in the second half of the year, many high-yield savings accounts and certificates maintained rates well above average, making them standout savings options.

Looking ahead

Looking ahead to 2025, further Federal Reserve rate cuts could put downward pressure on savings and certificate rates. Savers should stay informed about rate trends and may want to consider locking in competitive rates on certificates.

Home buying challenges continued

Home buying remained a significant challenge in 2024 as buyers grappled with multiple obstacles. Elevated mortgage rates kept monthly payments high, rising home prices stretched budgets, and a persistent housing shortage limited options for many. To add complexity, a new rule requiring buyers to negotiate their real estate agent’s commission introduced additional steps to an already complicated process.

Looking ahead

As 2025 unfolds, some relief may be on the horizon, but challenges will likely remain. While the Federal Reserve is expected to cut short-term interest rates, mortgage rates may not drop proportionally due to the unique factors influencing the housing market. Prospective buyers should prepare for a market that, while potentially less heated, is unlikely to offer significant relief in affordability in the near term.

On a positive note, the market shows some signs of potential improvement for both buyers and homeowners. Buyers could benefit from a modest increase in housing inventory, which could temper price increases and provide more options. Additionally, falling interest rates on home equity loans and lines of credit may make it more affordable for homeowners to invest in renovations, either to prepare their homes for sale or to improve comfort and efficiency

If you’re wondering how the economy will impact your finances or need help planning your next move, Chevron Federal Credit Union is here to help. Reach out to us. We’re ready to work with you to make the most of your money in the year ahead.