WASHINGTON, Feb 12 (Reuters) – U.S. existing home sales fell in January to the lowest level in more than two years, as falling inventories pushed up home prices.
Home sales fell 8.4% last month to a seasonally adjusted annual rate of 3.91 million units, the lowest level since December 2023, the National Association of Realtors said Thursday. Economists polled by Reuters had forecast existing home sales would decline by 4.18 million units.
Last month’s sales likely reflected contracts that were signed in November and December, and would not have been affected by the winter storms that hit much of the country in January. Home sales decreased 4.4% year over year.
“The decline in sales is disappointing,” said Lawrence Yun, NAR’s chief economist. “Affordability conditions are improving… as wage increases have outpaced home price growth and mortgage rates are lower than a year ago. However, supply has not kept pace and remains quite low.”
The NAR Housing Affordability Index rose to 116.5 in January, the highest since March 2022, from 111.6 in December.
Mortgage rates have declined as the Federal Housing Finance Agency, which oversees mortgage finance giants Fannie ‌Mae and Freddie Mac, began purchasing bonds issued by the two companies, although progress has stalled. Mortgage rates track the benchmark 10-year Treasury yield, which has risen amid high inflation pressures and concerns about federal government debt.
The inventory of existing homes fell 0.8% to 1.22 million units. Supply increased 3.4% compared to the previous year. At January’s sales rate, it would take 3.7 months to exhaust the current inventory of existing homes, up from 3.5 months a year ago.
The median price of existing homes last month rose 0.9% from a year ago to $396,800, the highest of any January. ‌The median days on market for listed properties increased to 46 from 41 a year ago.
First-time buyers accounted for 31% of sales, up from 28% a year ago. Economists and real estate agents say a 40% share in this category is needed for a strong housing market. Cash sales made up 27% of transactions, up from 29% a year ago.
Distressed sales, including foreclosures, accounted for 2% of transactions, up from 3% a year ago.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)