Sales of previously owned homes rose by 3.1% in January, but the high mortgage rates are still keeping more potential homebuyers on the sidelines, according to separate reports.
At least four million units of existing homes were sold in January on a seasonally adjusted annualized basis, data from the National Association of Realtors (NAR) showed. The count is based on closings, which means it covers contracts that were likely signed in November and December when mortgage rates hovered in the higher 6% range.
First-time home buyers were responsible for 28% of sales recorded in January. Investors or second-home buyers made up 17% of all purchases in the same month. At least 32% of all transactions in January were paid for in cash.
In addition to a rise in home sales, the total housing inventory registered at the end of January rose by 2.0% from December to 1.01 million units. It also rose 3.1% year-over-year from 980,000 during the same period in 2023.
Despite January's gain, the number of existing home sales is still down by 1.7% compared to the same period in 2023.
"While home sales remain sizably lower than a couple of years ago, January's monthly gain is the start of more supply and demand," NAR Chief Economist Lawrence Yun said. "Listings were modestly higher, and home buyers are taking advantage of lower mortgage rates compared to late last year."
Mortgage Demand Now Down Amid Rising Rates
While January offered a promising start to the year, mortgage-purchase applications declined by 10.6% in the week ending Feb. 16 after rates again jumped past 7% for the first time since mid-December, according to the latest report from the Mortgage Bankers Association (MBA).
Pending home sales also declined in February by 7% year over year, per Redfin. In most cases, the real estate firm's agents stated that home buyers are more interested in move-in ready homes than those in need of renovations and repairs. Additionally, more home buyers are asking for concessions for sellers, with the most common request being a mortgage-rate buydown, the firm noted.
