The real estate market in January showed some positive signs, with a 3.1% increase in sales of previously owned homes compared to the previous month. However, there was still a 1.7% decrease in sales compared to the same period last year. The increase in sales could be attributed to lower mortgage rates compared to the end of the previous year, although rates have risen again since then.
One notable trend is the rise in inventory, with 3.1% more homes available for sale compared to January 2023. However, this increase hasn’t significantly alleviated the supply shortage, as the inventory level remains at a low three-month supply.
This scarcity of supply continues to put upward pressure on home prices, with the median existing home price reaching an all-time high for January at $379,100, up 5.1% from the previous year.
The competitive nature of the market is evident in the prevalence of multiple offers, particularly on mid-priced homes, with a significant portion of homes selling above the listing price.
Cash deals also remain high, comprising 32% of sales, indicating intense competition among buyers. However, first-time buyers are struggling due to a lack of affordable options in the market.
Despite the increase in new listings, signed contracts have declined compared to the previous year, suggesting that higher mortgage rates are already impacting buyer demand. This indicates a potential slowdown in the market going forward, as affordability becomes more challenging for buyers.
