Existing home sales plunged 4.9% in January as 7% mortgage rates and record prices created historic affordability challenges, according to new National Association of Realtors data. The housing market recorded just 4.08 million seasonally adjusted annual sales - its weakest performance since last summer's rate spike.
Prices climbed 4.8% year-over-year to $396,900 - the 19th consecutive monthly increase despite cooling demand.
Buyers face a double crisis with unrelenting rates and premiums,warned NAR economist Lawrence Yun. Until the Fed addresses this disconnect, millions remain priced out.
The U.S. housing squeeze shows no signs of easing:
- Mortgage applications plummeted 6.6% this week (MBA)
- First-time buyers hit record-low 28% market share
- Homes take 41 days to sell - longest since 2019
While inventory rose 16.8% year-over-year to 1.18 million units, sellers maintain advantage with average listings attracting 2.6 offers. Nearly 15% of January buyers paid above asking price to secure properties. Experts warn current 3.5-month supply levels remain far below the 6-month threshold indicating balanced markets.
Prospective buyers are now executing stopgap strategies: 31% of December's sales involved all-cash offers, according to Redfin data not included in NAR's report. Economic uncertainty continues sidelining mainstream shoppers, particularly millennials struggling with:
- Student debt obligations
- Childcare costs
- Stagnant wage growth
With Fed officials projecting no significant rate cuts before Q3 2024, analysts predict continued sales stagnation through spring. Even a modest dip below 7% could spark urgency,Yun noted, but we're months away from meaningful relief.
