Existing Home Sales Drop 4.9% as High Rates and Prices Squeeze Buyers

U.S. existing home sales fell 4.9% in January to an annual rate of 4.08 million units, exceeding economists’ forecasted decline.

The decline to 4.08 million units annually was worse than the 4.12 million units economists had predicted. NAR Chief Economist Lawrence Yun points to a persistent affordability crisis, as mortgage rates have remained elevated around 6.85% despite the Federal Reserve cutting interest rates by 100 basis points since September.

This housing market weakness, coupled with a sharp decline in single-family housing starts, suggests residential investment is faltering early in 2024. The Fed’s pause in rate cuts reflects their assessment of potentially inflationary policies from the Trump administration, including tariffs, tax cuts, and immigration measures, leaving potential homebuyers caught between high rates and elevated prices.