(StraightShooterNews.com) – America’s housing market is taking a nosedive, as the National Association of Realtors reported a 4.9% drop in existing home sales for January 2025 as a consequence of the Biden effect.
This stark decline is no surprise to those who have long warned about unsustainable mortgage rates and rising home prices thwarting the average American’s dream of homeownership.
A free-falling housing market could be the wake-up call needed to address these growing concerns.
Existing home sales plummeted to an annualized rate of 4.08 million units in January, highlighting a significant shift from December’s figures.
The situation looks graver as buyers face the highest January median home price ever recorded, $396,900, a 4.8% rise from last year.
Despite the Federal Reserve’s efforts to cut short-term interest rates, mortgage rates stay stubbornly high, significantly impacting housing affordability.
Lawrence Yun, chief economist for the National Association of Realtors, stated, “Mortgage rates have remained high despite multiple rounds of short-term interest rate cuts by the Federal Reserve.”
January also saw homes lingering on the market for an average of 41 days, the longest duration since January 2020.
Moreover, a looming spring selling season may present yet another hurdle, as inventory levels are at a 3.5-month supply, significantly below what is seen as balanced.
Interestingly, all-cash offers have dropped to 29% from last year’s 32%, indicating that fewer buyers are financially capable of quick transactions.
There is a faint flicker of light in the housing gloom for the first-time buyer market. However, comprising only 28% of all sales, an increase in housing supply may offer well-qualified buyers a chance.
In this case, the road remains tough for average consumers striving to own homes without expanded inventory and reduced mortgage rates.
Adding pressure to this testing scenario is that sales of homes over $1 million surged by nearly 27% year-over-year, revealing that affordability remains a key concern for the general population.
Distressed sales rose to 3%, and buyer traffic weakened, indicating a possible crisis looming on the horizon.
As inventory rises to accommodate new buyers, the reality is stark—Americans are desperate for lower mortgage rates and a housing market that aligns with their economic capabilities.
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