Existing-home sales slowed in January, declining 4.9% from December to an annual sales pace of 4.08 million, according to the National Association of Realtors (NAR). Yet sales were up 2% from the same time last year, marking the fourth consecutive month of year-over-year gains. While short-term fluctuations can alter month-over-month sales, strong year-over-year sales highlight that overall demand for housing remains strong.
Home Prices Continue Upward Climb
Home prices continued their historic climb, with the median existing-home sales price reaching $396,900, a 4.8% increase from a year earlier. This was the 19th month in a row of price gains being recorded in every U.S. sales region. Sellers are the key beneficiaries of rising prices, as their initial investment continues to grow.
Will More Homes Draw More Buyers?
The number of unsold homes on the market increased in January by 3.5% from a month earlier, climbing to 1.18 million units. At the current sales pace, this would supply the demand from buyers for 3.5 months. In comparison, there was a 3.2-month supply in December and a 3-month supply in January 2024. “More housing supply allows strongly qualified buyers to enter the market,” noted Lawrence Yun, chief economist for the NAR. However, some buyers are waiting for inventory levels to increase further, while others are stalling until mortgage rates come down, since housing affordability is still a top concern for many potential home buyers.
Shifting Buyer Trends
First-time buyers accounted for 28% of all January transactions, down from 31% in December but unchanged from a year earlier. According to the 2024 “Profile of Home Buyers and Sellers,” the annual share of first-time buyers reached a record low of 24%. All-cash sales, meanwhile, accounted for 29% of all sales, a drop from 32% a year ago. Investors and second-home buyers represented 17% of all buyers, unchanged from a year earlier. These shifts in buyer demographics suggest that affordability challenges and increased competition from investors are impacting the buyer pool.
Regional Sales Breakdown
Northeast: Existing-home sales annual rate of 500,000; a decrease of 5.7% from December 2024 but an increase of 4.2% from January 2024. The median sales price of $475,400 represented a 9.5% increase from January 2024.
Midwest: Existing-home sales annual rate of 1 million; unchanged from December 2024 but an increase of 5.3% from January 2024. The median sales price of $290,400 represented a 7.2% increase from January 2024.
South: Existing-home sales annual rate of 1.83 million; a decrease of 6.2% from December 2024 but unchanged from January 2024. The median sales price of $356,300 represented a 3.5% increase from January 2024.
West: Existing-home sales annual rate of 750,000; a decrease of 7.4% from December 2024 but an increase of 1.4% from January 2024. The median sales price of $614,200 represented a 7.4% increase from January 2024.
