January was positioned to be a strong month for the home market. Home mortgage rates were down, and inventory was high. However, a lack of confidence and soaring prices in the market led to a decline in sales. Could February be the month to pick the market back up?
Conditions do look promising, with mortgage rates now hitting a one year low.
Existing Home Sales Fell again in January
For the third straight month, existing home sales were down in January. 4.94 million existing homes were sold. This was 1.2% lower than December, and 8.5% lower than this time last year.
Home prices increased throughout 2018, even as inventories expanded.
Sellers have an opportunity now. Those who can afford to reduce their asking prices could move their homes quicker. This would speed up cash return, while also reducing ongoing costs from advertising and agent fees.
First Time Buyers Were Less Active in the Market
First time buyer activity declined in January. Long term averages show that first time buyers usually make up 40% of sales. In January, they represented just 29% of the market.
Affordability is the major concern for first time buyers today. Many are priced out of the largest urban and suburban markets. Falling rates could possibly offset unaffordable prices.
Mortgage Rates Hit One-Year Low
This week, the 30-year fixed mortgage rate hit 4.35%. That’s the lowest it has been in a year. The 15-year fixed rate was also down, averaging 3.78%.
Home buyers could take advantage of this trend in February. The Federal Reserve is committed to maintaining the current money rate, but this could change later in the year. Anyone who can buy a home today may not find conditions to be as good in the coming months.
Good News for Both Buyers and Sellers
While reduced market activity in January was disappointing, February has the right conditions to be a much better month. Buyers can benefit from a lower mortgage rate, and sellers could see more interest in their listings.
With the economy at the tail end of its phenomenal growth, buyers and sellers will need to act decisively to take advantage of the current market.
You may be interested
Job Hiring is Picking Up as Employers and Consumers Gain ConfidenceLamont J - March 29, 2021
The recent government stimulus for small and medium-sized businesses, personal stimulus checks, and declining Coronavirus cases, are all great news…
Fed Could Maintain 0% Interest Rate Until 2024Adam R - March 26, 2021
The Federal Reserve is holding its target interest rate in a range of 0.00% - 0.25%, even while the economy…