US home sales slip for 12th month but turnaround may be in sight

WASHINGTON — Sales of existing homes in the United States fell for a 12th consecutive month in January, according to industry data released on Tuesday, defying expectations of an uptick.

The housing market in the world's biggest economy has slumped as the Federal Reserve rolled out an aggressive campaign of interest rate hikes last year to rein in soaring inflation.

But there are hopes that a turnaround will soon be in sight.

In January, sales of all types of homes and condos fell 0.7 per cent to a seasonally adjusted annual rate of 4 million, said the National Association of Realtors (NAR).

This was 0.7 per cent down from December's revised numbers, with all regions logging year-on-year sales declines as well.

But "home sales are bottoming out," said NAR Chief Economist Lawrence Yun, meaning a turnaround could soon take place.

"Prices vary depending on a market's affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines," he said in a statement.

This comes as mortgage rates remain high with the popular option of a 30-year fixed-rate mortgage averaging 6.3 per cent as of February 16, according to home loan finance company Freddie Mac.

The median home price across housing types was $359,000, down from in December but still 1.3 per cent above January 2022, said the NAR.

Existing home sales form the vast majority of the US property market.

Meanwhile, total housing inventory as of end-January was 980,000 units, 2.1 per cent higher than in December and above the year-ago figure as well.

Yun said that "inventory remains low, but buyers are beginning to have better negotiating power".

Homes that have been on the market for more than 60 days can be bought for around 10 per cent less than the original list price, he added.

"Mortgage rates remain high but have eased from the recent peak," said Rubeela Farooqi of High Frequency Economics.

But inventories remain tight, and prices are still markedly above pre-pandemic levels, she added in a note.

"Rising inventories and lower prices could provide support to home sales. But affordability remains a key constraint for buyers," she said.