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The housing market is finally heating up, according to a Realtor.com report released on Thursday.
Cooling mortgage rates have eased the lock-in effect amongst homesellers, leading to a 6.5 percent annual increase in overall listings (974,378). Active listings (665,569) and new listings (295,178) improved for the third consecutive month, with annual increases of 7.9 percent and 2.8 percent, respectively.
Danielle Hale
“We are seeing increases in inventory and, importantly, gains in newly listed homes for sale indicating sellers are more ready to make moves,” Realtor.com Chief Economist Danielle Hale said in a written statement. “Time on market fell, signaling that buyers are ready to make offers on these new options.”
More than half of the 50 largest metropolitan statistical areas (MSAs) in the U.S. experienced a boost in new listings during January. Denver (+21.3 percent), Seattle (+20.6 percent), Miami (+20.2 percent), San Diego (+18.8 percent) and San Francisco (+18.2 percent) had the biggest jump in newly listed homes.
Meanwhile, Chicago (-16.4 percent), New Orleans (-14.7 percent), Philadelphia (-12.9 percent), Buffalo (-12.6 percent) and Austin (-11.5 percent) had the most significant declines in homeseller activity.
Unsurprisingly, the boost in inventory has brought out the competitiveness of homebuyers. The typical home sold four days faster than in January 2023, with Las Vegas (-19 days), Phoenix (-14 days) and San Francisco (-13 days) seeing the biggest ramp-up in sales speed. Meanwhile, the median days on market slowed in Indianapolis (+6 days), New Orleans (+4 days), and Birmingham, Alabama (+3 days).
While January brought homebuyers more choice, it also brought higher purchasing costs.
The median listing price rose 1.4 percent year over year to $410,000, and the cost of financing a median-priced home with a 20 percent down payment increased 5.4 percent year over year or $108.
The median income required to purchase a median-priced home also increased, rising $4,300 to $84,000.
Hale said the anticipated drop in mortgage rates could improve affordability in the coming months; however, the impact won’t be felt in every market.
“While the drop in mortgage rates since last fall has helped boost buyer purchasing power, rates may not fall as quickly in the months ahead, and the anticipated improvement in affordability may be more uneven,” she said.
