Housing Market’s Recovery Slowed by Low Inventory and High Prices in January

In a new report released on Friday (2-24-23), Redfin said that pending home sales activity, through Redfin agents, rose 0.5% on a seasonally adjusted basis from a month earlier in January. That compares with December’s revised month-over-month increase of 1.4%, which marked the first gain in 14 months. However, pending sales fell from a year earlier, but the decline eased for the second month in a row—to 29.4% in January from 32.5% in December and a record 35.5% drop in November.

Adding additional background and analysis to the report’s release, Redfin’s Deputy Chief Economist Taylor Marr said:

“A dip in mortgage rates brought some buyers off the bench in January, but the housing market recovery was tempered by still-high housing costs and a limited number of homes being listed for sale. There were fewer new listings in January than at any point on record, with the exception of the start of the pandemic. That hampered demand because it meant that many of the buyers who were still in the market had a tough time finding a home that met their needs. The shortage of homes for sale also buoyed home prices.

The housing market took two steps forward in December and January but has taken one step back in February. Mortgage rates crept back up this month, which is prompting more buyers and sellers to back off.”