With mortgage rates down and housing stock up, January delivered some welcome bargaining power to home buyers across the U.S., but it may take more than that to convince some to make moves, according to a report Thursday from Realtor.com.
Nationwide, the number of homes for sale soared 65.5% year over year last month, giving buyers more options to choose from and further cooling the fierce competition that helped push prices skyward over the past two years.
But the figure also demonstrates that even with less competition and more time to make decisions, buyers were hesitant to commit to a purchase last month, underlined by a 31.9% annual drop in the number of pending listings, or homes under contract.
One of the main obstacles for potential home buyers has been the double-whammy of high mortgage rates and inflated property prices, which have drastically increased the cost of a move and kept plenty away from the market as their budgets are stretched.
But mortgage rates inched down in January. The 30-year fixed-rate stood at 6.09% as of Tuesday, down nearly a full point from November, when it peaked at just over 7%, according to lending giant Freddie Mac.
Listing prices, meanwhile, ticked up 8.1% year over year to a median of $400,000 in January, only a slight change from the December growth rate, the report said.
“Home buying in January remained relatively sluggish as sales slowed, inventories rose, and price growth leveled off. These trends reinforce that while buyers are gaining an advantage in the market, they are still being deterred by high home prices and financing costs,” said Danielle Hale, chief economist at Realtor.com.
“Even as inventories climb and prices moderate, homeowners have equity and advantages in the market but need to set their expectations accordingly,” she added.
Mansion Global is owned by Dow Jones. Both Dow Jones and Realtor.com are owned by News Corp.