E
xisting home sales took a 4.9% hit in January, but the underlying data suggests there's still pent-up demand in the market. Inventory grew to 3.5 months of supply, up from 3 months a year ago, according to the National Association of Realtors. Despite this decline, existing home sales were up 2% year-over-year in January, outpacing 2024 levels.

    Buyers are adapting to higher mortgage rates, but a significant uptick in sales is unlikely as long as rates remain elevated. Sluggish pending sales numbers suggest that existing home sales will continue to struggle in the coming months, potentially making the start of the spring homebuying season more subdued than expected.

    Rising inventory levels could help spur sales, giving buyers more choices and negotiating power. New listings are up by over 4% compared to this time last year, according to Redfin. However, high borrowing rates and rising home prices continue to hurt overall affordability. The median existing home sales price was $396,900 in January, a 4.8% increase from the same period last year.

    While price growth has slowed, with Altos Research estimating a 2% year-over-year increase, it's still a challenging market for buyers. Redfin reports that homes are now selling at 2% lower than their asking prices, indicating that buyers have more negotiating power.