“For Sale” and “Sales” signs for West Seattle, Seattle, Washington, USA on Tuesday, June 18, 2024. The National Association of Real Estate Brokers plans to release existing home sales data on June 21.
David Ryder | Bloomberg | Getty Images
High mortgage rates in January and rising housing prices combined hurt home sales.
Since the National Association of Real Estate Brokers began tracking the metric in 2001, pending sales are based on the lowest level of contracts signed by existing homes. Sales fell 5.2% from January 2024. These sales are indicators of future closures.
“It is unclear whether the coldest January of 25 years has contributed less to buyers in the market, and if so, greater sales activity is expected in the coming months,” said Lawrence Yun, chief economist at NAR. “However, it is clear that there are higher housing prices and higher mortgage rates, and higher affordability.”
While weather may be a factor, sales increase monthly in the Northeast while the West falls, which will see the effects of the coldest temperature. The south has the worst sales, which is the most active area in recent years.
Mortgage rates are also higher in January. In the first half of December, the average interest rate for popular 30-year fixed loans was below 7%, but then began to rise. According to Mortgage News Daily, the whole month of January was above 7%.
House prices have been lowering in some areas over the past few months, and sellers have lowered prices, but nationwide, they are still higher than a year ago.
Although sales on January’s sales list, including those that are contracted but not yet sold, increased 17% compared to last year, a 14th consecutive month of annual growth, according to Realtor.com.
“More sales inventory has the potential to generate more contract signing, but climbing home supply is not evenly distributed in the U.S.,” said Danielle Hale, chief economist at Realtor.com. “In addition, many areas with higher demand will see relatively low sales inventory, which limits more home sales.”
