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Existing-home sales struggled to break out of a winter slump, according to a National Association of Realtors report published on Thursday.
The sale of existing single-family homes, townhomes, condominiums and co-ops declined 1.7 percent year-over-year from 4.03 million in January 2023 to a seasonally adjusted annual rate of 4.00 million. Despite the annual decline, existing-home sales fared much better on a monthly basis, rising 3.1 percent from December due to moderating mortgage rates and a modest boost in new listings.
On a regional basis, existing-home sales were down annually in the Northeast (-5.9 percent), Midwest (-3.1 percent) and South (-1.6 percent). Meanwhile, sales were up month-over-month in all regions except the Northeast, where sales growth was unchanged from December. The West was the only region to experience annual and monthly growth.
Lawrence Yun
“While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand,” NAR Chief Economist Lawrence Yun. “Listings were modestly higher, and homebuyers are taking advantage of lower mortgage rates compared to late last year.”
Median home prices continued to boom in January, rising 5.1 percent year-over-year to an all-time high of $379,800.
“The median home price reached an all-time high for the month of January,” Yun said. “Multiple offers are common on mid-priced homes, and many homes were still sold within a month. The elevated share of cash deals — 32 percent — indicated a market full of multiple offers and propelled by record-high housing wealth.”
While Yun was bullish about January’s existing-home results, Realtor.com Chief Economist Danielle Hale was more reserved about what monthly gains mean for the upcoming months. Hale said existing-home sales will likely remain slow into the spring as buyers and sellers await the Federal Reserve’s first rate cut.
Danielle Hale
“Recent surveys indicate that consumers expected additional mortgage rate drops in 2024, but a hot jobs report followed closely by an elevated inflation reading in the consumer price index has ended the dip in mortgage rates for now, which could mean slower seasonally adjusted sales as the heart of homebuying season approaches,” she said.
Still, she said there are portions of the homebuyer pool — particularly millennials — who said they plan to purchase a home this year, even if rates go back up to 8 percent.
Bright MLS Chief Economist Dr. Lisa Sturtevant echoed Hale’s thoughts on millennial homebuyers‘ robustness. However, she was concerned about minority millennials’ ability to weather this market due to a widening wealth gap.
“Non-white individuals and families benefited most from the historically low interest rates in late 2020 and early 2021,” she said. “However, rates are now much higher and home prices have escalated, which has led to a retraction in the pace of homebuyers.”
“Delaying homeownership — or having to put it off altogether — means that many individuals and families are missing out on a critical way to build wealth,” she added. “The wealth gap in the U.S., which is already very high, will widen as existing homeowners and higher-income households are able to enter into homeownership while lower-income and prospective first-time and first-generation households are increasingly going to be left out.”
