A real estate agent walks into a home for sale in Lancaster, Ohio.
Ty Wright | Bloomberg | fake images
Sales of existing homes rose 3.1% in January to 4 million units on a seasonally adjusted annualized basis, according to the National Association of Realtors. Sales fell 1.7% year over year.
The count is based on closings, so contracts were likely signed in November and December, when mortgage interest rates retreated from their October high of 8%. By mid-December, rates had hit a recent low of around 6.6%. Today they have exceeded 7% again, according to Mortgage News Daily.
“While home sales remain considerably lower than a couple of years ago, January's monthly increase is the start of increased supply and demand,” said Lawrence Yun, NAR chief economist. “Listings were modestly higher and homebuyers are taking advantage of lower mortgage rates compared to the end of last year.”
The inventory of homes for sale in January increased to 1.01 million units, up 3.1% from January 2023, but still at a 3-month low in supply. Six months is considered a balanced market between buyer and seller.
That dynamic is why the market continues to see pressure on home prices. The median existing home price for all housing types in January was $379,100, up 5.1% from a year ago and an all-time high for the month of January.
All four U.S. regions experienced price increases, with 16% of homes selling above list price.
“Multiple offers are common on mid-priced homes, and many homes still sold within a month. The high proportion of cash offers (32%) indicated a market filled with multiple offers and driven by record real estate wealth,” Yun said.
Total cash holding of 32% increased from 29% in both December and January 2022.
First-time buyers accounted for only 28% of sales. Historically they represent around 40%, but the lack of affordable homes for sale is affecting them more.
While lower mortgage rates helped boost January sales, today's higher rates are already weighing on the market once again. A separate report from Redfin showed that new listings increased 10% year over year for the four weeks ending February 18, the largest increase in two months. However, signed contracts decreased 7% compared to the previous year, according to the report.
