The housing market slowed down in January as mortgage rates went back on the rise mid-month and home prices increased more rapidly, according to Redfin.
New listings dropped 1.2% month over month, the first decline since June, the firm says.
Although new listings were still up 2.7% from a year earlier, it was a marked deceleration from December’s 4.2% gain.
Active listings – the total number of homes for sale – fell 0.3% from a month earlier on a seasonally adjusted basis. It was the first decline in six months.
Year over year, active listings were down 4.4%.
Pending home sales also lost momentum in January, rising just 1.1% from a month earlier on a seasonally adjusted basis – a marked slowdown from December’s 5.1% jump.
Still, pending sales were at the highest level since September 2022 and rose 8.8% from a year earlier.
Stagnant mortgage rates are the main culprit that took the gas off the housing market pedal last month. They started and ended January at 6.6% – unexciting news after buyers and sellers at the end of last year watched rates drop the most since 2008.
“A lot of my customers are paying close attention to what the Federal Reserve says,” says Hal Bennett, a Redfin Premier real estate agent in Bellevue, Wash., in the Redfin report. “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.
“Inflation and geopolitical conflicts are also scaring some buyers. April, at the absolutely earliest, is when I think things could take off,” Bennett adds.
Brutally cold temperatures across the country last month also likely contributed to the slight cooldown in market activity.
Photo: Breno Assis