Home prices increased over the last four weeks ending January 21 to 5.1%, according to Redfin.
Additionally, asking prices saw a significant rise of 6.5%, echoing the largest jump since October 2022.
Several factors are contributing to this upward trend in home prices. First, the available housing inventory remains limited, with the total number of homes for sale down by 4% compared to the previous year. Although new listings have increased by 2%, this represents the smallest annual growth in two months.
Furthermore, sellers are enjoying the advantage of higher prices due to buyers' increased purchasing power, as mortgage rates have held steady in the mid-to-high 6% range, a notable drop from the 8% rates observed in October.
Severe winter weather across many parts of the country has led to sluggish real estate activity this week, with pending home sales declining by 8% year-over-year, marking a drop over four months. Part of this decrease can be attributed to a base effect from last January when pending sales were improving as mortgage rates fell.
Despite the weather-related slowdown, mortgage purchase applications are on the rise. In warmer regions, real estate agents are reporting increased demand.
“Real estate is usually slow in the Midwest in the winter, but this year it’s even slower than usual because the weather has been so extreme," said Grand Rapids, MI Redfin Premier agent Christine Kooiker. “Casual house hunters are staying home to avoid the roads—but inventory is low enough that serious buyers are finding a way to see desirable homes. I also believe we’ll get busier as we approach spring. People are used to higher mortgage rates, and they know prices are likely to go up more if they wait.”
In contrast, Shay Stein, a Redfin Premier agent in Las Vegas, noted that the beginning of 2024 has been exceptionally busy, with clients expressing interest in the market. Buyers seem willing to accept 6.5% mortgage rates, anticipating potential future increases, while sellers are capitalizing on the surge in buyer interest by listing their properties.
