Abdelrahman
On Tuesday, June 18, 2024, “For Sale” and “Sale Pending” signs were spotted in the West Seattle neighborhood of Seattle, Washington. The National Association of Realtors (NAR) is slated to publish its report on existing home sales figures on June 21.
Image Credit: David Ryder | Bloomberg | Getty Images
The housing market faced significant challenges in January due to high mortgage rates and steep home prices, leading to a decline in sales.
Pending home sales, which reflect signed contracts for existing properties, decreased by 4.6% from December, marking the lowest level since NAR began tracking this statistic in 2001. Compared to January 2024, sales were down by 5.2%. These pending sales offer a glimpse into future closings.
“It’s uncertain whether this past January, the coldest in 25 years, deterred buyers and whether we might witness an uptick in sales in the coming months as a result,” commented Lawrence Yun, NAR’s chief economist. “Nonetheless, it is clear that high home prices and rising mortgage rates have impacted affordability significantly.”
While weather conditions might have influenced the market, sales experienced a month-to-month increase in the Northeast, while the West saw declines—likely due to less impact from the cold. The South, traditionally a bustling region for home sales, experienced the sharpest declines.
In January, mortgage rates were notably elevated. The average rate for a 30-year fixed mortgage dipped below 7% in the first half of December, but climbed above that threshold for the entirety of January, as reported by Mortgage News Daily.
Although home prices have started to soften in some regions in recent months, with many sellers reducing prices, the national averages remain higher than they were a year prior.
The downturn in sales occurred even as the number of homes available for sale in January—including those under contract but not yet finalized—rose by 17% compared to the previous year, marking the first increase in inventory over the last 14 months, according to Realtor.com.
“An increased inventory of homes for sale could potentially lead to more signed contracts,” explained Danielle Hale, chief economist at Realtor.com. “However, the growth in available homes varies across the country, with many high-demand areas still facing low inventory, which hinders overall sales progress.”
