Listings Cool
Pending home sales slowed in January.
According to a recent report from Redfin, new listings in the real estate market experienced a 1.2% month-over-month decline on a seasonally adjusted basis, marking the first decrease since June. While new listings were up 2.7% from a year earlier, this growth rate represents a slowdown compared to December's 4.2% gain.
Additionally, active listings, which represent the total number of homes for sale, fell by 0.3% from the previous month on a seasonally adjusted basis. This marks the first decline in six months and reflects a 4.4% decrease year over year.
Pending home sales also saw a loss of momentum in January, with a 1.1% increase from the previous month on a seasonally adjusted basis, significantly slower than December's 5.1% jump. Nevertheless, pending sales reached their highest level since September 2022, rising 8.8% from a year earlier.
The stagnant mortgage rates are identified as the main factor behind the housing market's slowdown last month. Rates remained at 6.6% throughout January, after witnessing a significant drop at the end of the previous year. Homeowners are hesitant to sell as many still have mortgage rates below current levels, discouraging them from taking on higher rates.
“A lot of my customers are paying close attention to what the Federal Reserve says. Buyers and sellers came off the sidelines in December when the Fed signaled it would lower interest rates three times in the next year, but now some are getting cold feet because the Fed indicated that rate cuts may come later than expected,” said Hal Bennett, a Redfin Premier real estate agent in Bellevue, WA. “Inflation and geopolitical conflicts are also scaring some buyers. April, at the absolutely earliest, is when I think things could take off.”
Moreover, harsh winter weather across the country last month, combined with rising housing costs, likely contributed to the slight cooldown in market activity.
Despite the overall slowdown, home prices posted the biggest increase in 16 months, with the median U.S. home sale price climbing 5.2% year over year to $402,343 in January. This surge in prices underscores the persistent shortage of homes for sale, with both new listings and active listings remaining significantly below pre-pandemic levels.