From HousingWire:
New contracts for home purchases are coming in very low this month. We counted 10% fewer home sales for the week than the same week a year ago.
In the fourth quarter of 2024, sales were coming in at 5% to 10% more than the year prior. Those sales gains have evaporated and even reversed. Buyer activity has been dropping for several weeks and there are now fewer homes in contract than a year ago. Both the weekly new contracts and all the homes in the contract pending stage are below last year.
This housing market is on hold until mortgage rates come down. When will that be? I have no idea. We knew that mortgage rates over 7% were possible for the year, and here we are. I still expect we’ll spend most of the year under 7% for the 30-year fixed rate mortgage, but until that happens, home sales are at a standstill.
There’s signal that the price buyers are paying is declining too. I’ll share some of those signals in a minute.
Sales are slow, so inventory of unsold homes is building. Condo inventory is growing faster than single family. Some markets are much slower than others. Let’s look at the Altos Research data for this week, the middle of January 2025.
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There are now 632,000 single-family homes unsold on the market around the U.S. That’s up 1.25% from last week. It’s almost 25% more homes unsold than a year ago. As I mentioned, inventory of unsold condos is growing faster than that of single-family houses. There are 177,000 condos on the market. That’s 30% more than a year ago.
It’s not uncommon for inventory to tick up in mid-January like it did this week. The holidays are over, some of the spring listings come out, and there are not a lot of sales yet. It’s also common for inventory to dip again before the end of the month. And you can see that in each year’s pattern here.
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Inventory is building because of demand weakness, not because of supply growth. In fact, it seems like the high mortgage rates are holding back new listings, too. There were only 46,000 new listings for single-family homes this week with another 7,000 immediate sales.
The immediate sales are those that are listed and take offers within a few days, so they’re no longer in active inventory. There were 2% fewer sellers now than the same week a year ago but 3.6% more of those new listings unsold than a year ago. So, slightly fewer sellers, but inventory is growing faster than last year.
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The sales growth we measured in Q4 is gone, and home price gains from 2024 are looking like they’ve mostly evaporated, too.
The median price of those homes that went into contract this week — newly pending home sales — is $375,000. That’s essentially unchanged from a year ago, up just half a percent. Normally, this time of year you’d expect sales prices to be moving up each week. You get fresh new inventory, the first spring buyers are looking, and that pushes sales prices higher in the first quarter — usually. But this year, the pricing pressure is much weaker. Demand is weak and there is no upward pressure on sales prices. In normal years, home prices rise 5% or so over the prior year. This year is starting out much weaker for home prices than normal years.