The number of homes for sale in January increased by 7.9%, according to new data from Realtor.com.
With the increase in listings, median home prices also rose 1.4%, but time on the market dropped to more than two weeks shorter than pre-pandemic levels.
"We are seeing increases in inventory and, importantly, gains in newly listed homes for sale indicating sellers are more ready to make moves. Time on market fell, signaling that buyers are ready to make offers on these new options," Realtor.com Chief Economist Danielle Hale said. "While the drop in mortgage rates since last fall has helped boost buyer purchasing power, rates may not fall as quickly in the months ahead, and the anticipated improvement in affordability may be more uneven."
In January, more than half of the 50 metros included in the analysis saw new listings increase over the previous year, with some of the largest growth happening in Denver (+21.3%), Seattle (+20.6%) and Miami (+20.2%).
On the flip side, there were places that also saw declines in new listings, including Chicago (-16.4%), New Orleans (-14.7%), and Philadelphia (-12.9%).
But listing prices are inching up. The cost of financing the typical home, assuming a 20% down payment, increased by roughly $108 per month compared to a year ago. With this increase, the required household income to purchase the median-priced home went up by $4,300 to $84,000, before accounting for the cost of tax and insurance. However, as interest rates are falling and listing prices growth has remained muted, the increase in the monthly cost to purchase a home has slowed, down from 6.1% year-over-year last month to January's increase of 5.4%.
According to Redfin, more buyers are touring homes because mortgage rates are holding steady at below 7% and some buyers are worried prices will increase more if they wait longer. Sale prices rose 5.5% year over year during the four weeks ending January 28, the biggest increase in over a year.
But that earliest-stage demand hasn’t yet translated into home sales.
Mortgage-purchase applications declined and pending sales posted their biggest year-over-year decline in four months, likely reflecting tepid early-stage demand during the middle of January.
“I thought declining mortgage rates and more inventory would cause the market to take off right at the start of the new year. But even though demand has picked up some, I’m not wowed,” said Hal Bennett, a Redfin Premier agent in the Seattle area. “Now I believe this year’s market will launch in the spring, once 6% rates are even more entrenched in buyers’ psyches and more homeowners list their houses.”
