In January, sales of previously owned homes in the United States rose by 3.1% to 4 million units, indicating a slight improvement in the housing market. This growth in sales was attributed to a decrease in mortgage interest rates from their October high of 8% to a low of around 6.6% by mid-December. However, rates have now risen again to over 7%, which is affecting the market. Despite the sales increase, the number of home purchases remains lower than in previous years.
The market is still facing pressure on home prices due to a low inventory of homes for sale. Although there was an increase in the number of homes available in January, rising by 3.1% from January 2023, there is still a low 3-month supply. The median price of existing homes in January reached $379,100, which is a 5.1% increase from the previous year and an all-time high. Additionally, 16% of homes were sold above list price, indicating a competitive environment in the housing market.
First-time home buyers are facing challenges due to a lack of lower-priced homes for sale. Despite the boost in sales due to lower mortgage rates in January, the market is already experiencing negative effects from the increasing rates. New listings have risen, but signed contracts are down compared to the previous year. This indicates that the housing market may face challenges in the near future.
