Existing Home Sales

Existing home sales up after a year marked by declines 

Sales rose by more than 3% in January, suggesting a turnaround in 2024, but mortgage rates still hold the key to the future of the market.

Key points:

  • A gloomy 2023 left plenty of room for improvement in January, and monthly sales were flat or up in all regions.
  • Annual sales increased in the West, but slumping figures in the rest of the country resulted in a year-over-year decline of 1.7% nationally.
  • Mortgage rates will continue to drive the action as rising prices and low inventory keep both buyers and sellers out of the market.

After a historically dismal year, existing home sales seemingly had nowhere to go but up, and January’s numbers didn’t disappoint.

Existing home sales grew 3.1% last month, according to NAR’s latest data, with a seasonally adjusted annual rate of 4 million sales.

That’s a bump from December, but a 1.7% drop from a year ago. Still, the January figures showed a significantly slower rate of decline compared to most months in 2023, which often reported annual declines in the double-digits.

“Overall, in 2023, the number of existing home sales was at its lowest level since 1995, so it is widely expected that overall market activity will increase in 2024,” said Bright MLS Chief Economist Dr. Lisa Sturtevant.

Sales in the West helped boost the numbers nationally. With an annual increase of 2.8%, it was the only region to see a year-over-year increase.

“While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand,” predicted NAR Chief Economist Lawrence Yun. “Listings were modestly higher, and home buyers are taking advantage of lower mortgage rates compared to late last year.”

Unsold inventory rose 2% to 1.01 million at the end of January, up 3.1% year-over-year. That translates to three months of supply at the current sales pace, up just slightly from 2.9 months a year ago. A balanced market is typically considered to have around six months of supply.

Prices continued to climb, with median home sale prices rising 5.1% year-over-year to $379,100. That marks the seventh straight month of annual price increases, and increases were reported in all four regions of the country.

“The median home price reached an all-time high for the month of January,” Yun said. “Multiple offers are common on mid-priced homes, and many homes were still sold within a month. The elevated share of cash deals — 32% — indicated a market full of multiple offers and propelled by record-high housing wealth.”

‘All eyes on the Fed’

“Falling rates in December brought more buyers to the market, which drove the increase in closed sales in January,” Sturtevant said. “There is still strong demand, as the large millennial population remains in the prime first-time home-buying range. However, many are being shut out of the market due to rising home prices and elevated mortgage rates.”

CoreLogic Chief Economist Dr. Selma Hepp said what happens this year with mortgage rates — which were up again this week — will largely determine the future for housing in the U.S. 

“Existing home sales will continue to be constrained in the foreseeable future as the supply of homes remains tight and sellers continue to wait for lower mortgage rates,” Hepp said.

“All eyes are on the Fed now to cut rates this summer in order to provide relief to the buyers as well as stubborn sellers. Should they do so, existing home sales should expect a better outlook for the remainder of the year,” she added.

Regional snapshots

Existing home sales in the Northeast were unchanged from December but down 5.9% year-over-year. That didn’t stop prices from soaring: Median home prices reached $434,300, up 10.1% from January 2023.

In the Midwest, sales rose 2.2% from December but dropped 3.1% over the past year. The median price rose to $271,700, up 7.6% for the year.

The South saw sales rise 4% in January, down 1.6% from the previous year. The median price in the South hit $345,100, up 4.1% for the year.

Sales in the West continued to show a stronger recovery, up 4.3% for the month and 2.8% for the year. The median price was up 6.3% for the year at $572,100.

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