Sales of previously occupied U.S. homes declined in January due to rising mortgage rates and home prices deterring potential buyers despite a broader selection of properties. Sales dropped 4.9% from December to a seasonally adjusted annual rate of 4.08 million units, according to the National Association of Realtors. This figure fell short of the 4.11 million pace economists anticipated. Home prices increased annually for the 19th consecutive month, with the national median sales price rising 4.8% to $396,900. Lawrence Yun, NAR’s chief economist, noted that mortgage rates have remained stubbornly high despite Federal Reserve interest rate cuts, making housing affordability a significant challenge. The housing market has been in a slump since 2022 when mortgage rates began climbing from pandemic-era lows. The average rate on a 30-year mortgage has hovered around 7% this year, more than double the record low of 2.65% from over four years ago. Rising home prices and elevated mortgage rates have kept many prospective buyers, especially first-time buyers, on the sidelines. The inventory of unsold homes rose to 1.18 million at the end of January, translating to a 3.5-month supply. Yun expects up to 1.5 million homes to be on the market during the spring homebuying season but notes the U.S. needs closer to 2 million properties for sale. — news from The Associated Press
