Existing-home sales down nearly 37% from a year ago
Zachary Halaschak
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Sales of existing homes have fallen for a 12th straight month, with sales in January down a whopping 36.9% from the year before.
The hit to the housing market reflects the Federal Reserve’s efforts to lower inflation by raising interest rates, which has caused mortgage rates to rise and has put home purchases out of reach for many people.
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Existing-home sales fell by 0.7% in January to a seasonally adjusted annual rate of 4 million, according to a report by the National Association of Realtors released Tuesday.
Total housing inventory at the end of January was 980,000 units, up 2.1% from December and 15.3% from a year ago.
“Home sales are bottoming out,” said NAR Chief Economist Lawrence Yun. “Prices vary depending on a market’s affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines.”
The median price of an existing home in January was $359,000, a growth of 1.3% from the year before. Additionally, homes typically remained on the market for 33 days in January, an increase from 26 days in December and 19 days in January 2022 — indications of a sputtering housing market.
“Inventory remains low, but buyers are beginning to have better negotiating power,” Yun said. “Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price.”
When the Fed raises interest rates, it also causes mortgage rates to rise and makes housing more expensive and buying less attractive. The Fed last raised rates by a quarter percentage point earlier this month.
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As of Tuesday, the average rate on a 30-year fixed-rate mortgage was 6.32%, down from its peak but up more than 2 percentage points from a year ago, according to Freddie Mac. The rate on an average 15-year fixed-rate mortgage was 5.51%. Those numbers are much higher than the ultra-low level mortgage rates were at during the pandemic.
The current housing dynamic is also reflected in housing starts, which measure the annualized change in the number of new residential buildings that began construction. Housing starts fell 4.5% last month to an annual rate of 1.31 million units, according to recently released data from the Commerce Department.