Due to high interest rates and high housing prices, the number of homes for sale in the U.S. in January fell to a record low

High housing prices and high interest rates squeeze the market, with the number of homes for sale in the U.S. hitting a bottom in January. The National Association of Realtors (NAR) released data on Thursday showing that the number of homes for sale in the U.S. in January (based on signed contracts but not yet closed transactions) fell by 4.6% month-on-month, far exceeding the market expectation of a 0.9% decline, and down 5.2% year-on-year. Both declines were significantly higher than expected, marking the lowest level since the association began tracking this metric in 2001. The U.S. real estate market faced a "triple blow" at the beginning of this year, with significant declines in both new and existing home sales data, and the number of homes for sale also saw a sharp drop in January. The homes-for-sale metric is typically viewed as a leading indicator of future home sales, as contracts are usually signed one to two months before a home is officially sold. This suggests that home sales data in the coming months may continue to be under pressure. Regarding the reasons for the poor market performance, NAR Chief Economist Lawrence Yun stated: "It is currently unclear whether the coldest January in the U.S. in 25 years has led to a decrease in buyers in the market. If so, we can expect sales activity to increase in the coming months. However, it is evident that high housing prices and high mortgage rates have limited purchasing ability." While weather may be a contributing factor, regionally, in January, sales in the western region, which was less affected by cold weather, declined month-on-month, while the northeastern region saw an increase. Notably, the southern region, which has been the main area for home sales in the U.S. in recent years, experienced the largest sales decline, with contract signings plummeting by 9.2%, marking the largest single-month drop since the outbreak of the COVID-19 pandemic. In stark contrast to the decline in sales volume, U.S. housing prices and mortgage rates continue to rise. In terms of mortgage rates, according to Mortgage News Daily data, the average rate for the popular 30-year fixed mortgage briefly fell below 7% in the first half of December but then began to rise, stabilizing above 7% throughout January. Regarding housing prices, although prices in certain areas have retreated in recent months and more sellers are starting to lower prices, overall housing prices nationwide remain higher than the same period last year. This combination of high rates and high prices limits the purchasing power of potential buyers. It is noteworthy that, according to Realtor.com data, the inventory of homes in the U.S. (including those under contract but not yet sold) increased by 17% year-on-year in January, marking the 14th consecutive month of year-on-year growth. However, the increase in inventory has not translated into sales growth. In this regard, Realtor.com economist Hannah Jones pointed out: "More inventory for sale has the potential to bring more signed contracts, but the growth in housing supply is not evenly distributed across the U.S. Additionally, many high-demand areas have relatively low inventory for sale, which limits the progress of more home sales "