Sales of existing homes in the U.S. fell by 4.9 percent in January compared to the month before to a seasonally adjusted rate of 4.08 million, according to a new report by the National Association of Realtors (NAR), as high mortgage rates continue to discourage buyers.
Why It Matters
A drop in sales across the U.S. housing market suggests that the country is still in the midst of an affordability crisis, as mortgage rates are still hovering around the 7-percent mark, prices are still rising, and inventory remains historically low. Despite this, dwindling sales could also indicate that sellers across the country may soon feel motivated to slash their asking prices in order to attract reluctant buyers.
What to Know
According to the NAR report, sales of existing homes slipped in three major U.S. regions between December 2024 and January, while they only held steady in the Midwest.
Existing-home sales in the Northeast dropped by 5.7 percent from December to an annual rate of 500,000, up 4.2 percent from January 2024; the median price in the Northeast was $475,400, up 9.5 percent from one year earlier.
In the South, sales fell 6.2 percent to an annual rate of 1.83 million, unchanged from January 2024; the median price was $356,300, up 3.5 percent from last year. In the West, existing-home sales dropped by 7.4 percent last month to an annual rate of 750,000, up 1.4 percent from a year ago; the median price was $614,200, up 7.4 percent from January 2024.
In the Midwest, sales were unchanged in January at an annual rate of 1 million, up 5.3 percent from the previous year; the median price in the Midwest was $290,400, up 7.2 percent from January 2024.
Despite the monthly step back, year-over-year sales of existing homes across the nation climbed 2 percent last month compared to a year earlier, notching a fourth year-over-year gain.
The median existing home sales price also increased compared to one year earlier, gaining 4.8 percent to $396,900. Average home listing prices, on the other hand, have declined, according to Realtor.com data. According to the website, these were down 2.2 percent last month compared to a year earlier, at $400,500.
In the same month, inventory of unsold existing homes grew 3.5 percent compared to December 2024, reaching 1.18 million at the end of January—the equivalent of 3.5 months’ supply.
What People Are Saying
NAR chief economist Lawrence Yun said in a statement accompanying the report: “Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve. When combined with elevated home prices, housing affordability remains a major challenge.”
Danielle Hale, chief economist at Realtor.com, said in a statement shared with Newsweek: “January’s slower sales pace was foreshadowed by a dip in pending home sales in December. Mortgage rates averaged 6.76 percent in November and December when these homes with January closings generally went under contract, a noticeable uptick from September when mortgage rates were in the low 6 percent range.”
She added: “Although home sales pulled back somewhat, the fact that we saw growth compared to one year ago suggests that a fair number of buyers have adapted to the higher mortgage rates in today’s market environment (…)
“Recent sales growth has been more robust among higher price points, whereas data show that, among listings, lower-priced tiers have seen stronger gains, driving some of the divergence in the two price measures.”
What’s Next
Despite the current affordability challenges faced by buyers in the U.S. housing market, Realtor.com expects sales to exceed 2024’s long-term low in its 2025 Housing Forecast, as Americans may just accept that homeownership is now more expensive than it used to be.
“Weaker rent growth matched against higher home-buying costs have tilted the financial side of the buy-rent decision toward renting in the U.S. and the vast majority of large markets,” Hale said.
“But financial reasons are just one consideration for potential first-time homebuyers, many of whom consider homeownership an important part of the American dream.”
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