US home sales declined in January as rising mortgage rates and prices deterred would-be buyers despite a wider selection of properties on the market. The National Association of Realtors reported a 4.9% drop in sales from December to a seasonally adjusted annual rate of 4.08 million units.
Home prices increased for the 19th consecutive month, with the national median sales price rising 4.8% to $396,900. This rise in prices has made housing affordability a major challenge, according to Lawrence Yun, NAR’s chief economist.
Mortgage rates have remained high, hovering around 7%, more than double the record low of 2.65%. The average rate briefly fell to a two-year low last September but has not dropped significantly since. This has limited the ability of prospective home shoppers to afford homes.
Home loan applications also fell, with a 5.5% drop in the previous week’s applications. Fears about inflation and tariffs have driven up interest rates, affecting housing affordability.
First-time buyers accounted for 28% of all homes sold last month, down from 31% in December and 40% historically. If mortgage rates don’t ease, first-time buyers will continue to struggle with affordability. Experts predict the average rate on a 30-year mortgage to remain above 6% this year.
Despite the rising inventory of unsold homes – up 16.8% from last January – sellers still have an advantage over buyers. Homes typically remained on the market for 41 days before selling, and 15% sold for above their list price. However, Yun expects that by spring, there will be closer to 2 million properties for sale, alleviating supply constraints.
Source: https://apnews.com/article/housing-home-sales-real-estate-home-prices-ad62e56b3c6e784cb120996cd8ca5748