Despite multiple rounds of short-term interest rate cuts by the Federal Reserve, mortgage rates have remained stagnant for several months, leading to a major challenge in housing affordability, according to Yun. The median sale price saw a 4.8% annual increase, reaching $396,900 in January, highlighting the obstacles faced in the housing market.
In January, existing-home sales slowed down, allowing the inventory of unsold homes to increase by 3.5% from the previous month, totaling 1.18 million units. This represents a 16.8% increase in inventory compared to the previous year, equating to a 3.5-month supply at the current sales pace.
Yun emphasized that increased housing supply enables qualified buyers to enter the market, but for many consumers, both higher inventory levels and lower mortgage rates are essential to facilitate home purchases or first-time homeownership.
As a result of the rise in inventory, homes spent an average of 41 days on the market in January, up from 35 days in December and 36 days from the previous year.
While cash sales increased by one percentage point month over month to 29% in January, they were lower compared to January 2024. The share of distressed sales, including foreclosures and short sales, remained consistent at 3% month over month and year over year.
Regionally, existing-home sales declined in the Northeast (5.7%), South (6.2%), and West (7.4%) on a monthly basis. However, the Midwest saw steady sales at an annual rate of 1.3 million. Year over year, existing-home sales increased in the Northeast (4.2%), Midwest (5.3%), and West (1.4%), while remaining unchanged in the South.