Unexpected decline in U.S. existing home sales in January ends three-month growth trend.

In January, the sale of existing homes in the United States unexpectedly declined, ending a three-month growth trend mainly due to high mortgage rates and rising house prices, which suppressed housing demand. According to data released by the National Association of Realtors (NAR) on Friday, existing home sales in January fell by 4.9% compared to the previous month, with the seasonally adjusted annual sales volume dropping to 4.08 million units. This data was below market expectations, as economists surveyed by the media had predicted sales to fall to 4.12 million units. The sales data for January mostly reflected home contracts signed in November and December of 2023. According to data from the mortgage finance company Mortgage Bankers Association, the 30-year fixed mortgage rate increased from 6.72% at the end of October to 6.85% at the end of December, which may further suppress the purchasing power of home buyers. However, compared to the same period last year, existing home sales in January still increased by 2.0%. NAR Chief Economist Lawrence Yun stated, "Despite the Federal Reserve lowering short-term interest rates multiple times, mortgage rates have remained high in the past few months. Coupled with high house prices, housing affordability remains a major challenge for the market." Despite the Federal Reserve cutting rates by 100 basis points since September of last year, mortgage rates remain high. This is partly due to the rise in the yield of the 10-year U.S. Treasury note, which has increased due to strong economic resilience and stubborn inflation. Although the market expects rate cuts, most economists believe the Federal Reserve will at most cut rates once this year, or even not at all. In addition, the market is also watching for potential policies that President Trump may push, including tariffs, tax cuts, and large-scale expulsion of illegal immigrants, which are seen as likely to exacerbate inflation pressure and further influence interest rate trends. The supply situation in the second-hand housing market improved in January, with housing inventory increasing by 3.5% month-on-month to reach 1.18 million units, a 16.8% year-on-year increase. At the same time, house prices continued to rise, with the median price of existing homes reaching $396,900 in January, a 4.8% year-on-year increase. At the current sales pace, it would take 3.5 months for the market to absorb the existing inventory, higher than the 3 months at this time last year, but still lower than the 4-7 months level considered to indicate supply-demand balance. The average listing time for homes in January was 41 days, higher than the 36 days at this time last year, reaching the highest level since January 2020. First-time buyers accounted for 28% of total sales, unchanged from the same period last year. Economists and real estate agents believe that the market share of first-time buyers needs to reach 40% to support a healthy housing market. Cash transactions accounted for 29% of home sales in January, down from 32% at the same time last year. In addition, distressed properties (including foreclosures and short sales) accounted for 3%, up from around 2% in the past few years, indicating some signs of financial pressure in the market. Overall, the cooling of the existing home market in January reflects the continued suppression of housing demand in a high-rate environment. The future market trend still depends on the Federal Reserve's monetary policy adjustments, and whether a rate cut can stimulate more home buyers to enter the market.