Home sales declined in January with the combined effects of severe winter weather and the decline in affordability due to higher mortgage rates and prices than those seen in the previous year.
Sales have also been hindered at the beginning of this year by new mortgage and flood insurance regulations that recently took effect.
The flood insurance regulations are currently set to be reviewed, and buyers and sellers in flood-prone areas may want to become informed on how these regulations and potential changes are affecting their market. Home prices declined from December to January as inventory levels loosened slightly and home sales slowed. However, prices are still well above those seen at this time last year. Buyers willing to sell my house fast Seattle, brave the cold may be able to take advantage of some of the short-term price breaks at Calgary MLS. With prices still showing an upward year-over-year trend and inventory levels still tight, sellers remain well positioned in most markets.
Mortgage rates have remained relatively flat from last month. The upward pressure on rates generated by the Federal Reserve’s winding down of quantitative easing has been counterbalanced by downward pressure on Treasury yields being generated by turmoil in emerging markets. Currently, Freddie Mac reports the following figures: 30-year fixed rate, 4.33%; 15-year fixed rate, 3.35%; 5/1-year adjustable rate, 3.08%.
The annual pace of home sales was 4.6 million homes in January. This was down 5% from December and down 5% from the same month of the previous year. Severe winter weather likely affected home sales in many parts of the country in January; however, higher mortgage rates and prices, combined with new regulations, have also had a significant dampening effect on home sales. February has also seen more severe weather than usual and this will likely be reflected in next month’s numbers. As we move out of the winter months, and lenders and consumers adjust to the changes in affordability and regulation, we should see sales begin to pick back up.
The median home price fell 4.5% from December to January due to a slight increase in inventory and a fall in the pace of sales. Median prices are not seasonally adjusted so some decline at this time of year is considered normal. Prices remain almost 11% above those seen at this time last year, and many sellers continue to benefit from equity gains accrued in last year’s substantial price recovery.
Inventory levels recovered in January after taking a bit of a dip in December. The total number of homes that were available for sale increased 2% from December to January to 1.9 million homes. This represents 4.9 months of inventory at the current sales pace, which is up 11.4% from last year and up 6.5% from the previous month. As we move further into the year, we should continue to see inventory loosen, giving buyers more choices.
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