Impact of High Mortgage Rates and Elevated Home Prices on January Home Sales

High mortgage rates and elevated home prices led to a significant drop in home sales in January, with pending sales decreasing by 4.6% from December to the lowest level since tracking began in 2001. Sales were down 5.2% from January 2024, indicating challenges in affordability. Despite an increase in inventory, home prices remain high compared to the previous year.

Existing-Home Sales in January 2025

Existing-home sales fell sharply in January, with affordability challenges keeping many buyers on the sidelines. Despite monthly decline, sales were higher year-over-year. Housing affordability remains a major obstacle, with high-end sales increasing while entry-level sales decline. Inventory is increasing but not translating into stronger demand. Foreclosure starts jumped 30 percent in January. Federal Reserve unlikely to cut interest rates before June.

U.S. Real Estate Market

Sales of previously owned homes in the U.S. fell by 1.9% in April, with prices hitting a record high for the month. Despite the drop in sales, there was a significant rise in home prices, especially for properties priced at $1 million or more.