The housing sales volume in the United States in January has dropped to a record low, with persistently high mortgage rates, skyrocketing home prices, and possibly adverse weather conditions from the previous month all hindering potential homebuyers from making purchases.
The latest data released by the National Association of Realtors (NAR) on Thursday, February 27th, showed that the Pending Home Sales Index of the association dropped by 4.6% to 70.6. This index is an indicator of home sales based on contract signings. The volume of pending home sales in January decreased by 5.2% compared to the same period last year.
Transactions in the Midwest, South, and West regions all witnessed a month-on-month decline, with the Southern region experiencing the most significant decrease. However, in the Northeast region, despite consecutive severe wind and low-temperature weather conditions, home sales saw a slight increase.
Lawrence Yun, the Chief Economist of NAR, stated in a press release, “It is unclear whether the coldest January in 25 years has caused a reduction in buyers in the market, but if so, it is expected that sales activity will increase in the coming months. However, it is evident that rising home prices and higher mortgage rates are limiting people’s affordability.”
Mortgage rates in the previous month ranged from 6.91% to 7.04%.
NAR reported last Friday that existing home sales in the United States in January decreased by 4.9% compared to December last year, with a seasonally adjusted annual rate of 4.08 million units.
Compared with the same period last year, existing home sales in January increased by 2%. However, according to data from the financial data and software company FactSet, the latest existing home sales were below the economists’ expected 4.11 million units.
Home prices have been on the rise for the 19th consecutive month. In January, the national average sales price of homes increased by 4.8% compared to the same period last year, reaching $396,900.
The U.S. real estate market has been experiencing a sales slump since 2022 when mortgage rates began to rise from the lows of the pandemic era. Last year, existing home sales in the United States plummeted to the lowest levels in nearly 30 years.
(Note: This article referenced reports from the Associated Press)