Existing home sales across the United States decreased in January, according to a report released today by the National Association of Realtors® (NAR). While sales fell 4.9% from December to a seasonally adjusted annual rate of 4.08 million, they were up 2.0% compared to January 2024, marking the fourth consecutive month of year-over-year increases.
Three of the four major U.S. regions experienced sales declines, with only the Midwest holding steady. However, compared to the previous year, sales increased in three regions and remained unchanged in the South.
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NAR Chief Economist Lawrence Yun attributed the sales dip to persistently high mortgage rates, despite recent short-term interest rate cuts by the Federal Reserve. “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.”
Despite the sales slowdown, the median existing home price for all housing types continued its upward trend, reaching $396,900 in January. This represents a 4.8% increase from January 2024 ($378,600) and marks the 19th consecutive month of year-over-year price increases. All four U.S. regions saw price gains.
At the end of January, total housing inventory stood at 1.18 million units, a 3.5% increase from December and a substantial 16.8% increase from one year ago. At the current sales pace, this translates to a 3.5-month supply, up from 3.2 months in December and 3.0 months in January 2024.
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Yun noted that, “More housing supply allows strongly qualified buyers to enter the market. But for many consumers, both increased inventory and lower mortgage rates are necessary for them to purchase a different home or become first-time homeowners.”
Other key findings from the report:
- Properties typically remained on the market for 41 days in January, longer than in December (35 days) and January 2024 (36 days).
- First-time buyers accounted for 28% of sales in January, down from 31% in December but the same as in January 2024.
- Cash sales represented 29% of transactions, up slightly from December but down from 32% a year ago.
- Individual investors or second-home buyers purchased 17% of homes, up from 16% in December and unchanged from last year.
- Distressed sales (foreclosures and short sales) remained at a low 3% of total sales.
- The 30-year fixed-rate mortgage averaged 6.85% as of February 20th.
Regional Breakdown:
- Northeast: Sales down 5.7% from December, up 4.2% year-over-year. Median price: $475,400 (up 9.5%).
- Midwest: Sales unchanged from December, up 5.3% year-over-year. Median price: $290,400 (up 7.2%).
- South: Sales down 6.2% from December, unchanged year-over-year. Median price: $356,300 (up 3.5%).
- West: Sales down 7.4% from December, up 1.4% year-over-year. Median price: $614,200 (up 7.4%).
The report suggests a mixed housing market, with rising prices and increased inventory providing some opportunities for buyers, while high mortgage rates and affordability challenges continue to constrain overall sales activity.
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