According to a new report from Redfin, new listings dropped 1.2% month-over-month—or up 2.7% year-over-year—meaning numbers are mixed on a seasonally adjusted basis and down from December’s 4,2% gain.
Active listings, or the total number of homes for sale, fell 0.3% from a month earlier on a seasonally adjusted basis, marking the first decline in six months, marking a 4.4% year-over-year deceleration.
On the other hand, pending home sales also lost momentum in January, rising 1.1% from a month earlier on a seasonally adjusted basis, a noticeable slowdown from December’s 5.1% jump. Yet, pending sales were at its highest level since September 2022 and rose 8.8% year-over-year.
Factors Impacting Housing
The main culprit behind this is stagnant mortgage rates that decelerated the market last month. Rates started in January at 6.6%—unexpected and unwelcome news after buyers and sellers watched rates drop the most since 2008. Homeowners are hesitant to sell because a majority of them still have mortgage rates below current levels, and selling often means taking on a higher rate.
“A lot of my customers are paying close attention to what the Federal Reserve says. Buyers and sellers came off the sidelines in December when the Fed signaled it would lower interest rates three times in the next year, but now some are getting cold feet because the Fed indicated that rate cuts may come later than expected,” said Hal Bennett, a Redfin Premier real estate agent in Bellevue, WA. “Inflation and geopolitical conflicts are also scaring some buyers. April, at the absolutely earliest, is when I think things could take off.”
Brutally cold temperatures across the country last month, along with rising housing costs, also likely contributed to the slight cooldown in market activity.
The median U.S. home sale price climbed 5.2% year over year to $402,343 in January, the biggest jump since September 2022. Prices were little changed from a month earlier (-0.01%). Please note that home price data is not seasonally adjusted, which is why Redfin focuses on year-over-year changes for this metric.
Click here to view the report in its entirety, including highlights for select metropolitan areas.
