All hat but no cattle for home sales

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Published Date 2/24/2025

It’s no longer the case of ‘build it’ (or even ‘sell it’) and they will come. According to CNBC’s Diana Olick, the U.S. housing market is continuing to weaken, as potential buyers face stubbornly high mortgage rates, elevated prices and a limited supply of listings.

“Sales of previously owned homes fell 4.9% in January from the prior month to 4.08 million units on a seasonally adjusted, annualized basis, according to the National Association of Realtors. Analysts were expecting a 2.6% decline,” says Olick. “Sales were 2% higher than January 2024, but are still running at a roughly 15-year low.

Because this read is based on closings, contracts were likely signed in November and December when mortgage rates came down from over 7% to the 6% range. National Association of Realtors’ Lawrence Yun adds, “Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve. When combined with elevated home prices, housing affordability remains a major challenge.”

With 1.18 million homes for sale at the end of January, there was an increase of 3.5% posted from December and 17% from January 2024. While inventory is gaining, it is still at a 3.5-month supply at the current sales pace. A six-month supply is considered balanced between buyer and seller. Olick reports that the average home for sale last month spent 41 days on the market —the longest since January 2020, pre-Covid.

That law of supply and demand is alive and well, continuing to pressure prices. “The median price of a home sold in January was $396,900, up 4.8% from the year before and the highest price ever for the month of January,” says Olick. “All four regions tracked by NAR saw price gains. About 15% of homes sold above list price, virtually unchanged from 16% in both the previous month and the year-earlier period.”

Yun adds, “More housing supply allows strongly qualified buyers to enter the market. But for many consumers, both increased inventory and lower mortgage rates are necessary for them to purchase a different home or become first-time homeowners.”

All-cash offers made up 29% of sales, a historically high number, but down from 32% the year before. First-time buyers are still struggling while accounting for 28% of sales — a share that is unchanged from a year ago but well below historical averages of about 40%.

Interestingly enough, home sales are faring significantly better at higher price points and falling at lower price points. For example, sales of homes priced between $100,000 and $250,000 dropped 1.2% year over year, while homes priced over $1 million rose nearly 27% from the year before.

But buyer traffic is reportedly weak, according to the nation’s Realtors. All hat. No cattle.

CNBC, TBWS

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