Sales of previously owned U.S. homes saw a 3.1% increase in January, reaching a seasonally adjusted annual rate of 4 million, marking the strongest sales pace since August. This growth was attributed to the combination of easing mortgage rates and a slight uptick in available properties on the market. While this rise in sales is a positive sign for the housing market, it is important to note that sales were still 1.7% lower compared to January 2023.
The National Association of Realtors reported that the national median sales price for existing homes rose by 5.1% from January last year, reaching $379,100. This marks the highest median sales price for January since records began in 1999. The increase in sales was supported by a modest rise in the number of homes available for purchase, with 1.01 million homes on the market by the end of December.
Despite the increase in available inventory, the supply of homes remains below the historical average, leading to a 3-month supply at the current sales pace. In a more balanced market, a 4- to 6-month supply is typically preferred. The competition for limited housing stock, coupled with elevated mortgage rates, has impacted the purchasing power of potential buyers.
Although mortgage rates have decreased from their recent peak in late October, when the average rate on a 30-year mortgage hit a 23-year high of 7.79%, rates rose to a 10-week high last week. This trend has raised concerns among homebuyers, with the chief economist of the NAR highlighting the potential challenges that buyers may face as rates approach 7%.
