Persistent market headwinds resulted in a slow beginning to the year, according to Redfin. The typical days on market reached 54 days this month — the slowest pace since 2020.
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Elevated mortgage rates and home prices have brought the market to a near crawl, according to Redfin’s latest market report.
The typical for-sale listing took 54 days to go under contract during the four weeks ending on Jan. 26 — the longest days on market average since March 2020. Slowing market activity and pending home sales (-9.4 percent year-over-year) also pushed inventory levels up, with the months of supply reaching a six-year high of 5.2 months.
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“Sales are slow because it’s very expensive to buy a home, with mortgage rates sitting near 7 percent and home prices up 4.8 percent year over year,” the report read. “The median monthly housing payment is $2,753, just shy of April’s record high. Additionally, extreme weather — including snow and frigid cold in the Midwest, South and Northeast and wildfires in Southern California — are keeping would-be buyers at home.”
Median home price growth was highest across the Northeast and Midwest, with Pittsburgh (19.3 percent), Milwaukee (16.7 percent) Fort Lauderdale, Florida (14.2 percent), Newark, New Jersey (13.4 percent), and Cincinnati (11.7 percent) posting double-digit gains in January. Meanwhile, pending home sales only increased in Portland, Oregon (9.7 percent), and Milwaukee (2.6 percent), with the other 48 largest markets in the U.S. posting annual declines.
Jordan Hammond | Credit: Redfin
Despite January’s slow start, Redfin Premier agent Jordan Hammond said the coming months might spark more activity as homebuyers get tired of waiting for lower rates and home prices to make a move.
“Prospective buyers have been cautious because they’ve seen homes sitting on the market and they’ve heard interest rates and prices may drop. When the market isn’t competitive, some buyers think they should wait for costs to go down,” she said in a written statement.
“Now it’s pretty clear that sellers aren’t slashing asking prices and mortgage rates aren’t plummeting, so mindsets are shifting. People are starting to believe that if they want or need to move, and they can afford to, they should do it.”
Hammond’s prediction comes after the Federal Reserve announced it’s not cutting short-term rates, a move that will likely keep mortgage rates elevated for the near future.
“The Fed’s pause on rate cuts confirms what Treasury yields have been telling us — inflation risks are likely to keep mortgage rates high in the near term,” Fitch Ratings Senior Director Eric Orenstein said in a previous Inman article. “Mortgage refis could still pick up if long-term rates fall around 75 basis points, but there is clearly less momentum than there was even three months ago.”