Sales of existing U.S. homes increased 3.1% in January compared to December. This marks the strongest monthly pace since last August, according to data released Thursday. However, prices stayed elevated amid a still-limited inventory.
The year-over-year view shows a 1.7% decline in purchases of previously owned homes. Sales nearly sank to a 30-year low in 2023, plunging 18.7% from the prior year.
“While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand,” said Lawrence Yun, chief economist at the National Association of Realtors.
Still, at January’s median national sales price of $379,100, year-over-year cost appreciation continued for a seventh straight month.
Accelerating home values now outpace the 4.5% annual wage growth seen in January’s strong jobs report. “It’s unhealthy, we don’t want to see it, but its a testament to the housing shortage we’re facing in America,” Yun said.
Affordability hurdles persist for many aspiring buyers. 32% of January purchases were made entirely with cash, according to Yun. That’s the highest such share in 10 years.
Meanwhile, first-time homebuyers made up just 28% of deals, well below the norm of around 40 percent. A competitive market still leaves entry-level demand crunched in favor of consumers with resources and borrowing power.
“This is going to definitely impact the affordability for many people out there in the market place,” Yun said. “So, it’s not good news.”
As the critical spring season nears, sellers face countervailing dilemmas. While inventory usually varies between seasons , many current owners enjoy decades-low rates well under 6%.
The Associated Press contributed to this article.