Sales of existing homes slipped 4.9% in January, but year-over-year sales were up 2% as high prices and mortgage rates keep some potential buyers on the sidelines, including first-time buyers.
Existing home sales retreated in January, the National Association of Realtors said Friday. Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – dropped 4.9% from December to a seasonally adjusted annual rate of 4.08 million in January. Year-over-year, sales gained 2% (up from 4 million in January 2024).
“Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve,” NAR Chief Economist Lawrence Yun said. “When combined with elevated home prices, housing affordability remains a major challenge.”
Total housing inventory at the end of January was 1.18 million units, a 3.5% increase from December and up 16.8% from one year ago (1.01 million). Unsold inventory stood at a 3.5-month supply at the current sales pace, up from 3.2 months in December and 3 months in January 2024. A six-month supply is generally considered a balanced market.
“More housing supply allows strongly qualified buyers to enter the market,” Yun said. “But for many consumers, both increased inventory and lower mortgage rates are necessary for them to purchase a different home or become first-time homeowners.”
The median existing-home price for all housing types in January was $396,900, up 4.8% from one year ago ($378,600). All four U.S. regions reported price increases.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.85% as of Feb. 20. That’s down from 6.87% one week ago and 6.9% one year ago.
“Mortgage rates decreased slightly this week,” said Sam Khater, Freddie Mac’s chief economist. “The 30-year fixed-rate mortgage has stayed just under 7% for five consecutive weeks and in that time has fluctuated less than 20 basis points. This stability continues to bode well for potential buyers and sellers as we approach the spring homebuying season.”
