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Home Sales Rebound from Lowest Level in 30 Years in January
February 22, 2024
The housing market started the year on a somewhat stronger note, with the sales of previously existing homes increasing moderately after sales last year fell to the lowest level in nearly three decades.
Sales of existing homes, which make up the bulk of the housing market, rose 3.1% in January from the month before to a seasonally adjusted annualized rate of 4 million units, according to the National Association of Realtors. Despite the monthly increase, however, sales were down 1.7% year over year.
The sales figures are based on closings, so they represent contracts that were signed in November and December when mortgage rates retreated from nearly 8% in October. Rates reached their recent low of about 6.6% in mid-December, and today have climbed back up above 7%.
The inventory of homes for sale increased in January to 1.01 million units, an increase of 3.1% from January 2023. Even with the increase, however, inventory remains historically low. The current inventory represents a three-month supply. Industry analysts view a six-month supply as representing a balance between buyers and sellers.
The diminished supply of homes for sale has sent prices steadily higher, further sapping affordability that is already strained by higher mortgage rates. The median existing home price in January was $379,100, up 5.1% from a year earlier an all-time high for the month of January.
Buyers faced stiff competition in the market, with 16% of homes selling above asking price. Higher mortgage rates also mean that more buyers are resorting to all-cash offers. In January, 32% of all homes sold were cash offers, up from 29% in both December and January 2023. That marks the highest portion of all-cash offers since June 2014.
Buyers on the lower end of the market are feeling increasingly priced out, and first-time homebuyers made up 28% of January’s sales. Historically, first-time buyers make up roughly 40% of all sales.
