Home sales slump for the 12th month, but recovery may be near

According to industry data released on Tuesday, existing house sales in the United States decreased for the 12th straight month in January, defying expectations for an improvement.

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In response to the Federal Reserve's aggressive campaign of interest rate increases last year to contain spiraling inflation, the housing market in the largest economy in the world has collapsed.

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Nonetheless, there is optimism that a turnaround is imminent.

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According to the National Association of Realtors, sales of all kinds of houses and condominiums decreased in January by 0.7 percent to a seasonally adjusted annual pace of 4.0 million (NAR).

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This was 0.7 percent lower than the previously reported figures for December, and year-over-year sales decreased across the board.

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But, according to Lawrence Yun, chief economist of NAR, "home sales are bottoming out," which suggests a turnaround may occur soon.

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According to him, prices fluctuate based on how affordable a market is, with less expensive areas experiencing modest increases and more expensive areas suffering reductions.

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As of February 16, the popular 30-year fixed-rate mortgage had an average interest rate of 6.3 percent, according to home loan finance giant Freddie Mac. Mortgage rates are still high.

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According to the NAR, the median home price across all housing types was $359,000, down from December but still 1.3 percent higher than January 2022.

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Most US real estate transactions are for existing homes.

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The total housing inventory was 980,000 units at the end of January, 2.1 percent more than in December and also more than the same time last year.

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Inventory is still low, but buyers are starting to have more negotiation power, according to Yun.

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According to him, homes that have been listed for more than 60 days might be purchased for about 10% less than the original list price.

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Mortgage rates are still high but have decreased from their recent peak, according to High Frequency Economics' Rubeela Farooqi.

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She said in a note that although inventories are still low, prices are still significantly higher than before the outbreak.

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"Affordability remains a critical restraint for purchasers, but rising inventories and lower prices might assist home sales," she said.