Existing home sales decreased 4.9% in January

Existing-home sales declined 4.9% in January while marking the fourth consecutive month of year-over-year gains, according to data released by the National Association of Realtors (NAR).

Sales of previously owned homes fell to a seasonally adjusted annual rate of 4.08 million units in January, down from December but up 2.0% compared to January 2024's rate of 4 million units. The decline was geographically broad-based, with three major U.S. regions reporting lower sales while the Midwest remained stable.

The national median existing-home price reached $396,900 in January, representing a 4.8% increase from $378,600 a year earlier. This marks the 19th straight month of year-over-year price appreciation across all four U.S. regions.

NAR Chief Economist Lawrence Yun pointed to persistent mortgage rates as a key factor affecting market dynamics. "Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve," said Yun. "When combined with elevated home prices, housing affordability remains a major challenge."

Housing inventory showed signs of improvement, expanding to 1.18 million units at January's end - a 3.5% increase from December and 16.8% higher than January 2024's 1.01 million units. This translates to 3.5 months of supply at the current sales pace, up from 3.2 months in December and 3.0 months a year ago.

"More housing supply allows strongly qualified buyers to enter the market," Yun noted. "But for many consumers, both increased inventory and lower mortgage rates are necessary for them to purchase a different home or become first-time homeowners."

First-time buyers accounted for 28% of January transactions, down from December's 31% but matching January 2024's level. This follows NAR's 2024 Profile of Home Buyers and Sellers report from November, which recorded the lowest annual share of first-time buyers in the survey's history at 24%.

Properties typically remained on the market for 41 days in January, representing longer selling times compared to both the previous month's 35 days and January 2024's 36 days.

Cash transactions made up 29% of January sales, slightly higher than December's 28% but below the 32% recorded in January 2024. Individual investors and second-home buyers, who frequently make cash purchases, represented 17% of January home sales.

The 30-year fixed-rate mortgage averaged 6.85% as of February 20, according to Freddie Mac, showing a marginal decrease from 6.87% the previous week and 6.90% a year ago.

In the single-family segment, sales decreased 5.2% to a seasonally adjusted annual rate of 3.68 million units in January, though remaining 2.2% above last year's pace. The median price for existing single-family homes rose 5.0% year-over-year to $402,000.

Condominium and co-op sales declined 2.4% to a seasonally adjusted annual rate of 400,000 units, matching the level from January 2024. The median existing condo price increased 2.9% from the previous year to $349,500.