Transactions recovering
January existing home sales rose 3% month-over-month to 4 million units (that's an annualized number), the highest figure since August 2023. [Source: NAR] So what's driving the recovery? Three things: 1) lower mortgage rates in Nov/Dec 2023, 2) slightly improved inventory, and 3) normal seasonality. The median nationwide sales price in January was $379,000, up 5% year-over-year.
Show me the money!
With affordability an issue for most buyers, the % of deals that were "all-cash" (no mortgage involved) in January 2024 rose to 32%. We haven't seen a figure like this since 2014! So who has that kind of money? Older homeowners (massive equity in their existing homes) and property investors. But don't count out first-time buyers, who were still 28% of sales! When you gotta move out, you gotta move out. [Source: NAR]
Rates climb higher
Last week, average mortgage rates moved above 7% for the first time in several months. This week, rates moved even higher in response to the Fed's meeting notes, which suggested that most members support a "higher for longer" position on interest rates. The recent hotter than expected CPI and jobs figures have provided support for that view. [Source: Federal Reserve, CME]
