Getty/Grace Cary
- New listings of homes in the US fell in January, the first decline since last June.
- Pending home sales also weakened, rising 1.1% in the month, a big drop from 5.1% in December.
- Stubbornly high mortgage rates and seasonal factors have weighed on housing-market activity.
After showing stronger signs of life in recent months, activity in the US housing market shifted back to low gear in January.
New listings of homes for sale dropped 1.2% last month, marking the first decline since last June and a slowdown from December's 4.2% gain, according to a Redfin.
The total number of active listings dropped 0.3% from a month earlier and was down 4.4% year-over-year. Finally, the number of pending home sales saw a tepid increase, rising just 1.1% in the month compared to an increase of 5.1% in December.
The culprit behind the slowdown has been more subdued expectations for rate cuts by the Federal Reserve, which has, in turn, kept mortgage rates high. The 30-year fixed mortgage rate rose to 6.87% last week, an uptick after a period of steady declines.
"A lot of my customers are paying close attention to what the Federal Reserve says. Buyers and sellers came off the sidelines in December when the Fed signaled it would lower interest rates three times in the next year, but now some are getting cold feet because the Fed indicated that rate cuts may come later than expected," said Hal Bennett, a Redfin Premier real estate agent in Bellevue, WA.
With less certainty around the path of interest rates, many homeowners also are holding back from selling as most are locked into lower rates than what they can get today, the Redfin note said.
"Inflation and geopolitical conflicts are also scaring some buyers. April, at the absolutely earliest, is when I think things could take off," Bennett said.
Meanwhile, competition for homes on the market is still fierce, and buyers are still contending with investors who are on the hunt for real estate. Investors bought 26% of the lower-priced houses for sale in the fourth quarter.