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HOME SALES SLUMP IN JANUARY, BUT SPRING COULD BRING RELIEF
 High mortgage rates and rising home prices continued to put pressure on buyers in January, leading to a drop in existing-home sales, according to the National Association of Realtors (NAR). Sales fell 4.9% from December, landing at a seasonally adjusted annual rate of 4.08 million homes. Despite the monthly decline, there’s a silver lining—sales were still 2% higher than a year ago, marking the fourth straight month of annual growth. WHAT’S BEHIND THE SLOWDOWN? NAR Chief Economist Lawrence Yun pointed to stubbornly high mortgage rates as a key factor in cooling demand. “Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve,” Yun said. “When combined with elevated home prices, housing affordability remains a major challenge.” At the current sales pace, the supply of unsold homes rose to a 3.5-month inventory, up from 3.2 months in December and three months in January 2024. According to the monthly Realtors Confidence Index, homes sat on the market for an average of 41 days—longer than the 36-day average a year ago. That increase in supply could be good news for well-qualified buyers, but Yun noted that many are waiting for both inventory to rise and mortgage rates to drop before making a move. HOME PRICES KEEP CLIMBING While sales slowed in January, prices kept rising. The median existing-home price jumped 4.8% year over year to $396,900, with all four U.S. regions seeing price gains. A SPRING REBOUND ON THE HORIZON? Even with the January slump, some experts believe the housing market could pick up in the coming months. “The housing market’s newfound resilience is due to higher inventory levels, with active and new inventory up 17% and 4%, respectively, from a year ago,” said Odeta Kushi, Deputy Chief Economist at First American Financial Corp. She expects inventory to keep trending upward, giving buyers more choices and potentially more negotiating power. Markets with increased new-home construction could also see a boost in affordability, leading to stronger sales. With spring on the way, buyers and sellers alike will be watching closely to see if a seasonal rebound takes hold.
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