The housing market showed signs of improvement in January 2024, following a decline towards the end of 2023. Despite the upswing in sales activity, home prices also experienced an increase during this period.
Sales Performance
According to the National Association of Realtors, existing home sales in January reached a seasonally-adjusted annual rate of four million units. This marked the highest rate recorded since August of the previous year. Compared to December’s figures, home sales saw a 3.1% uptick, although they were 1.7% lower than January 2023.
Supply and Demand Dynamics
Lawrence Yun, the chief economist at the National Association of Realtors, noted that the increase in January sales could signify a rebalancing of supply and demand dynamics within the housing market. With listings showing a modest rise and favorable mortgage rates compared to the previous year, prospective buyers have been taking advantage of these factors.
Pricing Trends
The median home price in January stood at $379,100, reflecting a 5.1% increase from the same period in 2023. Lawrence Yun highlighted that this surge in prices led to an all-time high for January sales. Cash deals accounted for 32% of transactions, illustrating a market driven by multiple offers and robust housing wealth.
Affordability Challenges
While buyers anticipated a potential decrease in home affordability, recent data suggests otherwise. January marked the first time in over a year where home price growth surpassed wage growth. Yun emphasized that this imbalance is a result of the ongoing housing shortage prevalent across the country.
Mortgage Rate Movement
Additionally, mortgage rates have seen an upward trend in recent weeks, with rates climbing above 7% according to the Mortgage Bankers Association’s weekly survey. Redfin’s data also indicated a 6% increase in home prices compared to the same period last year, highlighting continued market strength.
In summary, while January brought an uptick in housing market activity, challenges related to pricing, affordability, and inventory supply remain key considerations for both buyers and sellers.
