Home sales and prices rose in January as eager homebuyers returned to the market

Sales of existing homes in the US increased in January due to falling mortgage rates, encouraging buyers to make purchases. However, the surge in sales may not last if rates continue to climb. Existing home sales, which include different types of homes, rose 3.1% from the prior month to a seasonally adjusted annualized rate of 4 million units. Compared to the previous year, sales were down 1.7%. The median cost for a home also rose 5.1% from a year ago to a record high of $379,100. Cash buyers accounted for 32% of all purchases, the highest share in nearly a decade. The share of first-time home buyers dropped to 28%. Rising mortgage rates, high prices, and low inventory levels pose challenges for buyers. Home prices are increasing faster than wage growth. Although inventory slightly increased in January, it would take a significantly higher level to loosen the market. The timing of home purchases is influenced by mortgage rates, and rising rates may dampen buyer interest.