A real estate agent walks into a home for sale in Lancaster, Ohio.
TyWright | Bloomberg | Getty Images
Sales of previously owned homes rose 3.1% in January to 4 million units on a seasonally adjusted annual basis, according to the National Association of Realtors. Sales fell 1.7% year-over-year.
The count is based on closings, so the deals were likely signed in November and December, when mortgage interest rates fell from an October high of 8%. By mid-December, rates had hit a recent low of around 6.6%. Today they are back above 7%, according to Mortgage News Daily.
“While home sales remain significantly lower than a couple of years ago, January’s monthly increase is the beginning of stronger supply and demand,” said Lawrence Yun, NAR’s chief economist. “Listings were slightly higher and homebuyers are taking advantage of lower mortgage rates compared to the end of last year.”
Inventory of homes for sale in January increased to 1.01 million units, up 3.1% from January 2023, but still 3-month low supply. Six months is considered a balanced market between buyer and seller.
This dynamic is why the market is still under pressure on home prices. The median existing home price for all home types in January was $379,100, up 5.1% from a year earlier and an all-time high for the month of January.
All four regions of the United States saw price increases, and 16% of homes sold above list price.
“Multiple offers are common for mid-priced homes, and many homes still sold within a month. The high percentage of all-cash deals – 32% – points to a market full of multiple offers and driven by record real estate wealth,” Yun said. .
The all-cash share of 32% is up from 29% in both December and January 2023. It’s also the highest level in nearly a decade, since June 2014.
First-time buyers accounted for just 28% of sales. Historically they represent about 40%, but the lack of low-priced homes for sale is hitting them the hardest.
While lower mortgage rates helped boost sales in January, today’s higher rates are already weighing on the market once again. A separate report from Redfin showed that new listings increased 10% year over year during the four weeks ended Feb. 18, the largest increase in two months. According to the report, however, signed contracts decreased by 7% compared to a year ago.
Correction: The 32% all-cash share of home sales in January 2024 increased from 29% in January 2023. An earlier version of this story misstated the comparison.