Home Sales on the Rise
Sales activity in the housing market saw a significant boost in January, with buyers taking advantage of mortgage rates below 7% at the beginning of the year. The National Association of Realtors reported that sales of previously-owned homes surged by 3.1% to reach an annual rate of 4 million, marking the highest level since August 2023.
Exceeding Expectations
The increase in sales surpassed Wall Street’s expectations, which had anticipated a pace of 3.97 million for January. Additionally, December’s sales figure was revised upwards to 3.88 million from the initial read of 3.78 million.
Price Trends
The median price for existing homes in January climbed by 5.1% to $379,100 compared to the previous year, reaching an all-time high for the month. Despite this growth, home prices continue to outpace wage growth, which increased by 4.5% annually in January. While prices have dipped from a peak in June 2022, when the median resale home price hit $413,800.
Market Statistics
The NAR highlighted that around 16% of properties were sold above their list price. Moreover, the total number of homes available for sale in January saw a 3.1% increase from the previous year, totaling 1.01 million units. Homes listed for sale also stayed on the market for an average of 36 days in January, up from 29 days in the previous month.
Housing Market Update
Sales Surge Across the Nation
Sales of existing homes saw a boost in various regions, with the West leading the way with a 4.3% increase. The median price of homes in the West stood at $572,100.
All-Cash Deals Dominate
All-cash transactions accounted for 32% of sales, marking the highest share since June 2014. Additionally, individual investors or second-home buyers made up 17% of purchases, while first-time home buyers acquired about 28% of the properties.
Overall Market Trends
The housing market experienced a resurgence as the 30-year mortgage rate dropped below 7% in mid-December, fueling sales growth in January. However, the recent rise in rates may dampen this recovery in the coming months. Following the Federal Reserve’s decision to postpone an interest rate cut in March, mortgage rates crossed the 7% mark once more. Prospective home buyers have shown sensitivity to these rate fluctuations, evident from weekly applications data.
Impact of Rate Changes
According to Realtor.com, even minor shifts in rates can significantly impact home affordability. A mere half-percent decrease in mortgage rates translates to a $120 reduction in the monthly payment for the average home, resulting in savings of $43,000 over a 30-year loan term.
Insights from Realtors
Lawrence Yun, chief economist at the NAR, highlighted some key observations in the current market dynamics. He mentioned that multiple offers on mid-priced homes have become commonplace, with many properties being sold within a month. The high percentage of cash transactions at 32% reflects a competitive market environment driven by record levels of housing wealth.
