A rush of homes go under contract in January, but will it last?
A sharp drop in mortgage interest rates brought homebuyers out in force in January, but rates have bounced back higher again, so the gains may be short-lived.
Signed contracts on existing homes jumped 8.1% last month compared with December, according to the National Association of Realtors. That’s the second straight month of gains. Sales, however, were still 24% lower compared with January 2022.
The mortgage rate effect was also seen in sales of newly built homes in January, as those numbers from the U.S. Census Bureau are based on signed contracts as well, not closings. Builder sales jumped just over 7% compared with January. Some of that was due to incentives offered by big builders, but lower rates improved affordability, especially for buyers of entry-level homes.
“Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur. “But an annual gain in home sales will not occur until 2024. Meanwhile, home prices will be steady in most parts of the country with a minor change in the national median home price.”