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The National Association of Realtors reports a 3.1% increase in existing home sales in January, reaching 4 million units on a seasonally adjusted annualized basis. However, this growth comes with a year-over-year decline of 1.7%.
Lawrence Yun, the NAR’s chief economist, notes that the increase in sales is a positive sign of improving supply and demand dynamics. Modestly higher listings and lower mortgage rates compared to late last year have encouraged homebuyers to enter the market.
Inventory of homes for sale also saw a slight increase in January, reaching 1.01 million units, up 3.1% from the previous year. However, this level of inventory still represents a low three-month supply, indicating continued pressure on home prices.
The median existing home price for all housing types reached $379,100 in January, marking a 5.1% increase from the previous year and setting an all-time high for the month. Price increases were observed across all U.S. regions, with 16% of homes selling above list price.
The market continues to experience multiple offers, particularly on mid-priced homes, with many properties selling within a month. Notably, the share of all-cash transactions reached 32%, the highest level since June 2014, indicating a market driven by multiple offers and record-high housing wealth.
However, first-time buyers represented only 28% of sales, below the historical average of about 40%. The lack of lower-priced homes for sale is disproportionately affecting this segment of buyers.
While lower mortgage rates helped drive January sales, the market is already feeling the impact of rising rates. New listings increased by 10% year over year, but signed contracts were down 7% from the previous year, according to a report from Redfin.
Overall, January’s existing home sales indicate positive momentum in the market, but the resurgence of higher mortgage rates is beginning to weigh on buyer activity, posing a potential challenge to sustained growth in the coming months.