Home buyers were likely hesitant due to the unusual winter weather and fluctuating interest rates, and existing home sales fell significantly in January.
According to the National Association of Realtors (NAR), existing home sales fell by 8.4% on a monthly basis and by 4.4% on an annual basis due to rising temperatures in the country in January.
Lawrence Yun, NAR’s chief economist, said an unusually wintery January in many parts of the country likely deterred some homebuyers from purchasing, making it a challenge to identify other economic causes of the steep sales decline.
Lawrence Yun | Chief Economist, National Association of Realtors
“The decline in sales is disappointing. Temperatures were below normal and precipitation was above normal in January this year, making it more difficult than usual to assess the underlying causes of the decline in sales and determine whether this month’s numbers are abnormal,” Yun said in a statement.
“The affordability situation is improving, with NAR’s Housing Affordability Index showing that housing is the most affordable it has been since March 2022,” Yun continued. “This is because wage growth has outpaced house price growth and mortgage rates are lower than they were a year ago. However, supply has not kept pace and remains quite low.”
Unsold inventory increased to 3.7 months of supply in January, up from 3.5 months in December and year over year. However, total housing inventory decreased by just 0.8% from December to January, to 1.22 million units.
Meanwhile, the median sale price of existing homes increased by 0.9% year-on-year to $396.800. Still, affordability improved in all regions, with the affordability index rising to 116.5 in January, up from 111.6 the previous month and 102 a year earlier, NAR reported.
“Due to the lack of supply, the median home price has reached its highest level in January,” Yun said. “As a result, homeowners are in a better position financially. Since January 2020, the typical homeowner has accumulated $130,500 in home equity.”
Single-family home sales fell the most in January, down 9% from the previous month and 4.3% from a year ago. The median sales price for existing single-family homes in January was $400,300, up 0.6% from the same period last year.
Condominium and co-op sales fell 2.6% on a monthly basis and 5% on an annual basis. The median sales price was $364,600, an increase of 3.8% from the previous year.
Lisa Sturtevant, chief economist at BrightMLS, said in a statement that homebuyer hesitation in December amid continued interest rate volatility also contributed to the decline in home sales.
Dr. Lisa Sturtevant | Chief Economist at Bright MLS
In an email to Inman, Mr. Sturtevant said that “concluded sales typically represent contracts that occurred within the preceding 30 days.” “Despite lower mortgage rates, pending sales were weak in December. Many buyers remained on the sidelines, waiting not only for interest rates to fall but for interest rates to stabilize. Therefore, the number of closed sales in January is a true reflection of the conditions buyers encountered in December.”
“Buyers will find a more favorable market as we head into the spring,” Sturtevant added. “Higher inventory, lower interest rates and slower price growth will give buyers more room to negotiate. January’s snow may have delayed buyers a little, but we’ll see more homebuyers come early this spring.”
The Northeast managed to increase existing home sales on a monthly basis, but it was the only region with an increase in January. Sales of existing homes in this region increased by 5.9% from the previous month to an annual rate of 480,000 units, which was a decrease of 4% from the previous year. The median sales price in the area was $505,400, up 5.8% year over year.
Meanwhile, the Midwest, South, and West all experienced significant monthly declines of 7.1%, 9%, and 10.3%, respectively.
Annual sales in the Midwest reached 920,000 units, also down 7.1% from the previous year. The region’s median sales price increased 2.3% annually to $295,400.
In the South, annual sales decreased by 1.6% to 1.81 million units. The median sales price was $351,200, an increase of 0.1% from January 2025.
Annual sales in the West were 700,000 units, down 7.9% from the previous year. Median sales price decreased 1.4% from January 2025 to $600,400.
Email Lillian Dickerson
