Record-breaking Home Sales Increase in January
The real estate market has begun this year on a promising note, with January witnessing a significant surge in home sales. According to Lawrence Yun, the chief economist for the National Association of Realtors (NAR), this positive turn indicates a consistent uptick in both supply and demand. Yun asserts, “While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand.”
Strong Demand and Modest Increase in Listings
January’s housing inventory reached 1.01 million units, marking a 3.1% rise from January 2023. This growth, amidst a three-month supply that is considered relatively low, hints at a market leaning towards the seller. Although elevated demand can put pressure on housing prices, Yun indicates that buyers are capitalizing on the advantage of lower mortgage rates in comparison to the previous year.
Market Pressures Drive Home Prices to All-Time High
Amidst the ongoing scenario, home prices have soared, reaching a median of $379,100 in January. This surge reflects a 5.1% increase from the previous year, setting a new January record. Notably, the rise in prices has been uniform across all four regions of the United States, and astonishingly, 16% of homes were sold above list price.
Multiple Offers, Swift Sales, and Cash Deals
The competitiveness in the real estate market is exemplified by common multiple offers on mid-priced homes and sales occurring within a month’s time. Lawrence Yun affirms, “The elevated share of cash deals – 32% – indicated a market full of multiple offers and propelled by record-high housing wealth.” Such a high cash share hasn’t been witnessed in nearly a decade, significantly contributing to the brisk market movement.
Concerns for First-time Buyers in the Current Market
First-time buyers, who traditionally make up around 40% of sales, constituted a mere 28% in January’s sales figures. A lack of options in the lower-priced housing segment perpetuates their struggle to find suitable properties. This imbalance in the market highlights the difficulty faced by aspiring homeowners stepping into the market for the first time.
Market Reacts to Rising Mortgage Rates
While January witnessed a positive sales trend attributed to lower mortgage rates, recent market developments have seen a shift in the opposite direction. With interest rates now on the rise, the Redfin real estate website reported a 10% increase in new listings compared to the previous year’s stats. However, the number of signed contracts decreased by 7% from a year ago, indicating a slight dampening effect due to the upward shift in rates.
Correction – Comparing January 2024 and 2023 Data
Correction: The 32% all-cash share of January 2024 home sales was up from 29% in January 2023. An earlier version of this story misstated the comparison.
