AP Business Writer Alex Veiga
LOS ANGELES (AP) – Sales of previously occupied US homes have been postponed many home buyers in January despite rising mortgage rates and prices being broader real estate options in the market It has decreased.
The National Association of Realtors said Friday that sales fell 4.9% last month from December to a seasonally adjusted annual rate of 408 million units.
Sales increased 2% compared to January last year, marking the fourth annual increase. However, according to Factset, the latest home sales weren’t enough for the pace economists that the 41 million pace economists were hoping for.
Home prices have risen annually for the 19th consecutive month. The median national selling price rose 4.8% to $396,900 from the previous year in January.
“We’ve seen a lot of effort into making this a reality,” said Lawrence Yun, chief economist at NAR. “Coupled with rising home prices, home affordability is a major challenge.”
The U.S. housing market is in a sales recession dating back to 2022, when mortgage rates began to rise from lows during the pandemic era. Sales of previously occupied US homes fell to their lowest levels last year in nearly 30 years.
Mortgage buyer Freddie Mac said the average 30-year mortgage rate fell briefly last September, but has hovered almost 7% this year. This is more than double the record low, 2.65%, which average rate hit more than four years ago.
Mortgage charges have been eased in recent weeks, but the decline has not been sufficient to change the affordability equation for many future home shoppers.
According to the Mortgage Bankers Association, mortgage applications have fallen by 5.5% from last week to the lowest level from the previous week.
Mortgage rates are influenced by several factors, including the yield on US 10-year financial obligations that lenders use as a guide to priced mortgages. Inflation may remain stubbornly high in the US economy, and the potential impact of tariffs and other policies proposed by the Trump administration has been eased in recent weeks. It has increased the Treasury’s yield for the 10 years since the election.
The rise in household prices and mortgage increases can add hundreds of dollars per month to borrowers’ expenses, but it has fairness from many future home shoppers, especially existing homes. Not keeping first-time buyers. Buying a new home. They accounted for 28% of all homes sold last month, matching stocks in January 2024, but down from 31% in December. The annual share of first-time buyers fell to a record 24% last year. Historically, it was 40%.
If mortgage fees are not eased from current levels, first-time buyers will continue to struggle “because there is no affordable housing,” Yun said.
The forecasts from several economists primarily seek to exceed the average 30-year mortgage rate at 6% this year, with some economists including a 6.8% high range.
Home shoppers who could afford to buy with current mortgage fees or pay full speeds for Sidestep finance have been able to choose more homes since last month.
At the end of last month there were 1.18 million homes for sale, up 3.5% from December and 16.8% from January last year, NAR said.
This translates to a 3.5-month supply at the current sales pace, rising from a 3.2-month pace in December to a 3.2-month pace at the end of January last year. Traditionally, supply for 5-6 months was considered a balanced market between buyers and sellers.
One reason home inventory for sale is rising is that property takes longer to sell.
The house usually stayed on the market for 41 days in January before it was sold. This is the longest before the pandemic. In December, the house was usually on the market 35 days before its sale.
Despite improved inventory, sellers generally have an advantage over buyers.
Approximately 15% of homes purchased last month were sold at a higher price. And on average, the house received a 2.6 offer last month, Yun said.
Yoon predicts that there could be 1.5 million homes in the market once the spring home buying season begins, but noted that the US needs to be close to 2 million properties for sale.
“We’re still supply constraints, but the worst supply constraints are over,” he said.
Original issue: February 21, 2025 10:05am EST
