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Existing-home sales climbed in January, with gains reported in the Midwest, South, and West, according to the National Association of Realtors (NAR). Sales were steady in the Northeast. Year-over-year sales grew in the West but declined in the Northeast, Midwest, and South. “While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand,” according to Lawrence Yun, the chief economist for NAR.

Supply gains were seen in a modest increase in listings, while demand was fueled by buyers seeking to lock in lower mortgage rates compared to late last year.  More buyers are turning to cash as mortgage rates continue to be elevated.

More Mid-Priced Homes Wanted
The median existing-home price for all housing types reached record highs for the month of January, climbing to $379,100. This was an increase of 5.1% from a year ago. All sales regions posted price gains. What’s more, multiple offers were common for mid-priced homes, with many homes selling in under a month. According to the monthly REALTORS Confidence Index, the average property remained available for sale for 36 days in January, up from 29 days a month ago and 33 days a year ago.

More Inventory Needed
Rising home prices were fueled in part by low inventory levels, though the market is starting to move in the right direction. By the end of January, total housing supply sat at 1.01 million units, up 2% from a month ago and 3.1% a year ago. At the current sales pace, this inventory supply would stock the market for 3 months, down from 3.1 months in December but up from a 2.9-month supply in January 2023.

Who’s Buying?
Despite the increase in sales, the share of first-time buyers entering the housing market was down in January, reaching 29%; in comparison, first-time buyers represented 29% of all buyers in December and 31% a year ago. According to the NAR “2023 Profile of Home Buyers and Sellers,” the annual share of first-time buyers was 32%. All-cash sales, however, increased to 32% in January from 29% both a month ago and a year ago. “The elevated share of cash deals indicated a market full of multiple offers and propelled by record-high housing wealth,” added Yun. Individual investors or second-home buyers—groups who account for most all-cash sales—represented 17% of all buyers in January, up from 16% from both a month ago and a year ago.

Regional Breakdown

• Northeast: Existing-home sales annual rate of 480,000; unchanged from December 2022 but a decrease of 5.9% from January 2023. The median sales price of $434,300 represented a 10.1% increase from January 2023.

• Midwest: Existing-home sales annual rate of 950,000; an increase of 2.2% from December 2022, but a decrease of 3.1% from January 2023. The median sales price of $271,700 represented a 7.6% increase from January 2023.

• South: Existing-home sales annual rate of 1.84 million; an increase of 4% from December 2022, but a decrease of 1.6% from January 2023. The median sales price of $345,100 represented a 4.1% increase from January 2023.

• West: Existing-home sales annual rate of 730,000; an increase of 4.3% from December 2022 and 2.8% from January 2023. The median sales price of $572,100 represented a 6.3% increase from January 2023.

Buyers Turn to Cash