Housing market activity took a hit in January as pending home sales fell to their lowest point since the National Association of Realtors (NAR) began tracking them in 2001. The decline of 4.6% from December underscores the ongoing affordability challenges posed by elevated home prices and persistent high mortgage rates.
Impact of Weather and Regional Differences
While inclement weather may have contributed to reduced sales, trends varied by region. The Northeast saw an increase in month-over-month sales, while the Western and Southern markets cooled significantly. The South, previously a hotbed for real estate activity, recorded the steepest drop.
Mortgage Rates and Home Prices
Mortgage rates remained a significant obstacle for buyers. The average rate on a 30-year fixed mortgage hovered above 7% throughout January, making affordability even more challenging. Meanwhile, home prices showed early signs of easing in select markets, with sellers increasingly willing to offer price reductions. However, on a nationwide scale, prices remained higher than a year ago.
Inventory Growth and Buyer Demand
Despite contracting sales, available inventory saw a 17% year-over-year increase, marking the 14th consecutive month of annual expansion, according to Realtor.com. However, the distribution of new listings remains uneven, with high-demand regions continuing to experience a limited supply.
“More inventory has the potential to boost contract signings, yet supply remains tight in key markets,” noted Hannah Jones, an economist at Realtor.com.
January’s record-low pending home sales highlight the delicate balance between rising inventory, affordability concerns, and fluctuating market demand. Whether homebuyers return in greater numbers in the coming months largely depends on potential moderation in mortgage rates and home pricing.
