The Housing Market Rebound Isn’t Here Yet

Core Insights - The housing market is experiencing a downturn, with existing home sales in January dropping 8.4% from December, reflecting ongoing affordability challenges and low inventory levels [1][2] - Economists anticipate a potential improvement in sales due to lower mortgage rates, but affordability issues are expected to persist [1] Group 1: Sales Performance - Existing home sales in January were at an annualized rate below 4 million, maintaining activity near decades-low levels [1] - The decline in sales is attributed to poor weather conditions and limited inventory, which has kept prices elevated [1][2] Group 2: Affordability Trends - Mortgage rates averaged 6.1% in January, down from nearly 7% a year ago, contributing to improved affordability conditions [1] - The median home price in January was $396,800, reflecting a modest increase of 0.9% from the previous year [1] Group 3: Inventory and Market Dynamics - Inventory levels increased by 3.4% over the past year, but remain significantly below pre-pandemic averages, limiting home price appreciation [1] - The cold weather in early January impacted home sales, particularly in the Midwest and Northeast regions, with expectations that warmer weather may boost sales [1][2] Group 4: Future Outlook - Economists predict a thaw in market conditions this spring, but significant improvements in affordability are seen as distant [1] - Low inventory levels are likely to continue affecting the market, with a cap on how much sales activity can improve in the near term [1]