Sales of previously occupied US homes fell sharply in January as higher home prices and possibly harsh winter weather kept many prospective homebuyers on the sidelines despite easing mortgage rates.
Existing home sales sank 8.4% in last month from December to a seasonally adjusted annual rate of 3.91 million units, the National Association of Realtors said Thursday.
That’s the biggest monthly decline in nearly four years.
Sales fell 4.4% compared with January last year.
The latest sales figure fell short of the 4.105 million pace economists were expecting, according to FactSet.
Home sales slowed sharply across the Northeast, Midwest, South and West.
“The decrease in sales is disappointing,” said Lawrence Yun, NAR’s chief economist. “The below-normal temperatures and above-normal precipitation this January make it harder than usual to assess the underlying driver of the decrease and determine if this month’s numbers are an aberration.”
Despite the sharp drop in sales, home prices continued to climb last month.
The national median sales price increased 0.9% in January from a year earlier to $396,800.
Home prices have risen on an annual basis for 31 months in a row.
The US housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows.
The combination of higher mortgage rates, years of skyrocketing home prices and a chronic shortage of homes nationally following more than a decade of below-average home construction have left many aspiring homeowners priced out of the market.
Sales of previously occupied homes remained stuck last year at 30-year lows.
Sales have been hovering close to a 4-million annual pace now going back to 2023.
That’s well short of the 5.2-million annual pace that’s historically been the norm.
Still, mortgage rates have been trending lower for months, which helped give home sales a boost in December and brightened the outlook for the upcoming spring homebuying season — at least for home shoppers who can afford to buy at current rates.
The average rate on a 30-year mortgage briefly dropped last month to 6.06%, the lowest level since September 2022, according to mortgage buyer Freddie Mac.
It has since inched higher, remaining just above 6% and roughly a percentage point lower than a year ago.
Affordability remains a challenge for many aspiring homeowners, especially first-time buyers who don’t have equity from an existing home to put toward a new home purchase.
Uncertainty over the economy and job market are also keeping many would-be buyers on the sidelines.
The sales slowdown means more homes are staying on the market longer.
There were 1.22 million unsold homes at the end of January, down 0.8% from December and up 3.4% from January last year, NAR said.
That’s still well short of the roughly 2 million homes for sale that was typical before the COVID-19 pandemic.
January’s month-end inventory translates to a 3.7-month supply at the current sales pace. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.
