Sales of previously occupied U.S. homes rose in January as homebuyers took advantage of easing mortgage rates and a modest increase in properties on the market.
The National Association of Realtors said Thursday that existing home sales rose 3.1% last month from December, reaching a seasonally adjusted annual rate of 4 million units.
That’s the strongest sales pace since August, according to FactSet, and slightly ahead of the 3.98 million sales pace that economists had expected.
The modest increase in sales was an encouraging start for a housing market that has been in the doldrums for the past two years.
Still, compared to January 2023, sales decreased by 1.7%.
Existing home sales last year fell to the lowest level in nearly 30 years, down 18.7% from 2022.
“While home sales are still significantly lower than they were a few years ago, January’s monthly increase is the beginning of an expansion in supply and demand,” said NAR Chief Economist Lawrence Yun.
Due to the recovery in sales, home prices rose for seven consecutive months compared to the same month last year.
The national median sales price rose 5.1% from January last year to $379,100.
This is the highest median sales price in January on record since 1999.
A slight increase in the number of homes on the market contributed to the boost in sales.
According to NAR, 1.01 million homes were listed for sale as of the end of December.
This is a 3.1% increase from the same month last year, but the number of available homes is still significantly lower than the historical monthly average of about 2.25 million units.
Based on the current sales pace, the inventory as of the end of January is equivalent to three months’ worth.
This was an increase of 2% compared to the previous month and 3.1% compared to January last year.
In a market with a balance of buyers and sellers, there is 4 to 6 months’ worth of supply.
Years of rising prices, competition for relatively few homes on the market and rising mortgage rates are limiting the purchasing power of home hunters.
Home financing costs have fallen from their most recent peak in late October, when average interest rates on 30-year mortgages hit a 23-year high, but rates rose to a 10-week high last week. did. According to mortgage buyer Freddie Mac.
“(Homebuyers) are looking at mortgage rates approaching 7%. This is not good news for homebuyers,” Yun said.
