Coverage: Home sales fell 1.2 percent in January

U.S. home sales fell 1.2 percent in January to their worst pace in more than three years, as persistent affordability problems have put a harsh chill in the real estate market.

Josh Boak of the Associated Press had the story:

The National Association of Realtors said Thursday that sales of existing homes declined 1.2 percent to a seasonally adjusted annual rate of 4.94 million last month, the slowest sales rate since November 2015.

During the past 12 months, sales have plunged 8.5 percent. Would-be homebuyers are increasingly priced out of the market as years of climbing prices and strained inventories have made ownership too costly. A solid job market has done little to boost sales, with the sharpest annual sales declines being among homes priced less than $250,000.

“January’s weak sales pace was likely the result of the lingering effects of stock market volatility and lower consumer confidence toward the end of 2018,” said Joel Kan, associate vice president of industry surveys and forecasts at the Mortgage Bankers Association. “Much of the January decrease was in the lower price tiers, which also tends to be where inventory is the tightest.”

Homes are sitting on the market longer, causing inventories to rise. Properties stayed on the market for an average of 49 days, up from 42 a year ago. The number of homes for sale has risen to 1.59 million from 1.52 million a year ago, yet inventories are still tight compared to historic averages.

Harriet Torry of The Wall Street Journal reported that it was the third consecutive monthly decline:

January marked the third consecutive month of declining sales, and last month’s 4.94 million home sales were the lowest since November 2015. Compared with a year earlier, sales in January declined 8.5%.

Lawrence Yun, the association’s chief economist, said weak sales in January were likely to mark a cyclical low given moderating home prices and gains in household income.

“The continued slowdown in price growth coupled with higher household income is making homes more affordable to more people,” said Robert Frick, an economist at Navy Federal Credit Union. If mortgages rates stay lower, “many of last year’s discouraged home shoppers could see enough opportunity to make them home buyers this year,” he added.

Interest rates were on the rise for most of 2018, but cooled at the turn of the year. The average rate on a 30-year, fixed-rate mortgage was 4.35% the week ended Feb. 21, down from 4.94% in mid-November, according to Freddie Mac.

Jason Lange of Reuters reported that higher mortgage rates have hurt:

The U.S. housing market has been stymied by a sharp rise in mortgage rates since 2016 as well as land and labor shortages. That has led to tight inventory and more expensive homes.

At the same time, the 30-year fixed mortgage rate has dipped in recent months and house price inflation is slowing.

The median existing house price increased 2.8 percent from a year ago to $247,500 in January. That was the smallest increase since February 2012.

Last month, existing home sales fell in three of the country’s four major regions, rising only in the Northeast.

There were 1.59 million previously owned homes on the market in January, up from 1.53 million in December.