A “For Sale” sign on a home in Philadelphia, Pennsylvania, USA on Friday, August 16, 2024.
Joe Lamberti | Bloomberg | Getty Images
The U.S. housing market continues to weaken as potential buyers face stubborn mortgage rates, high prices and limited listing supplies.
Sales of previously owned homes fell 4.9% from the previous month to 4.08 million on a seasonally adjusted annualized basis, according to the National Association of Realtors. Analysts expect a 2.6% drop.
Sales are 2% higher than in January 2024, but are still running at a low price of about 15 years.
The reading is based on a contract with a closure, so mortgage rates that may be signed in November and December drop from above 7% to the 6% range.
“Although the Fed lowers its short-term interest rate several times, mortgage rates have been rejected for months,” said Lawrence Yuan, chief economist at NAR. “Housing affordability remains a major challenge when combined with rising housing prices,” said Lawrence Yuan, chief economist at NAR. .”
There were 1.18 million homes for sale at the end of January, an increase of 3.5% from December and a 17% increase from January 2024. Despite the increase in inventory, current sales are still at 3.5 months of supply. The supply between buyers and sellers is 6 months.
The average home for sale last month spent 41 days on the market. That’s the longest, forward floating one since January 2020.
The tight supply continues to pressure on prices. The median price for homes for sale in January was $396,900, up 4.8% from the previous year, the highest price in January. All four regions tracked by NAR. About 15% of homes are sold above the price, with little change, from both the Transparent Month and the 16% during the annual period.
“More housing supply allows qualified buyers to enter the market,” Yun added. “But for many consumers, they buy other homes or become first-time homeowners are necessary to stock and lower mortgage rates.”
All-Cash’s sales accounted for 29% of sales, which was historically high, but fell from 32% the previous year. First-time home buyers are still struggling, accounting for 28% of sales. This share has not changed from a year ago, but is well below the historical average of about 40%.
Home sales are much better at higher prices and prices are falling. For example, home sales priced between $100,000 and $250,000 fell 1.2% year-on-year, while homes priced above $1 million rose nearly 27% from the previous year.
Real estate agents reported weak buyer traffic in January.
“Real estate agents are proposing more contracts, but the buyers are not coming,” Yun said.
