New home listings in January dropped 1.2 percent month-over-month on a seasonally adjusted basis, the first decline since June, according to a new report from Redfin.
They were up 2.7 percent from a year earlier, but that marks a deceleration from December’s 4.2 percent gain.
Active listings (the total number of homes for sale) fell 0.3 percent from December on a seasonally adjusted basis — the first decline in six months — and were down 4.4 percent year over year.
Pending home sales also lost momentum in January, rising 1.1 percent from a month earlier on a seasonally adjusted basis—a marked slowdown from December’s 5.1 percent jump from November. Still, pending sales were at the highest level since September 2022 and rose 8.8 percent 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 percent — unexciting news after buyers and sellers at the end of last year watched rates drop the most since 2008. Homeowners are hesitant to sell because a majority of them still have mortgage rates below current levels, and selling often means taking on a higher rate, Redfin added.
“A lot of my customers are paying close attention to what the Federal Reserve says. 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,” Hal Bennett, a Redfin Premier real estate agent in Bellevue, Wash., said in a release. “Inflation and geopolitical conflicts are also scaring some buyers. April, at the absolute earliest, is when I think things could take off.”
Brutally cold temperatures across the country last month, along with rising housing costs, also likely contributed to the slight cooldown in market activity.
The median U.S. home sale price climbed 5.2 percent year-over-year to $402,343 in January, the biggest jump since September 2022. Prices changed little from a month earlier (-0.01 percent). Home price data is not seasonally adjusted, which is why Redfin focuses on year-over-year changes for this metric.
America's enduring shortage of homes for sale is the primary driver of price growth; both new listings and active listings remained far below pre-pandemic levels in January, according to Redfin.