U.S. sales of previously owned homes fall for a 12th month

Sales of previously owned U.S. homes unexpectedly declined for a 12th straight month in January, extending a record decline and underscoring how high mortgage rates continue to stifle housing activity.

Contract closings slipped 0.7% at the start of the year to an annualized pace of 4 million, according to data from the National Association of Realtors on Tuesday. The pace of purchases, which was the weakest since 2010, fell short of the median projection of 4.1 million in a Bloomberg survey of economists. Still, the pace of monthly sales declines has slowed.

Houses are also sitting on the market for longer, leading some sellers to accept lower prices. That, in turn, could help alleviate the affordability challenges stemming from the Federal Reserve’s rapid increase in interest rates.

“Home sales are bottoming out,” Lawrence Yun, NAR’s chief economist, said in a statement. “Inventory remains low, but buyers are beginning to have better negotiating power.”

“Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price,” Yun said.

Properties remained on the market for 33 days on average at the start of the year, up from 19 days a year earlier. That’s helping to put downward pressure on home prices.

The median selling price was up just 1.3% from a year earlier, the smallest annual gain in home prices in nearly 11 years, to $359,000.

Some 54% of homes sold were on the market for less than a month. The number of homes for sale edged up to 980,000 in the month, the NAR data showed. It would take 2.9 months to sell all the homes on the market, unchanged from a month earlier. Realtors see anything below five months of supply as indicative of a tight market.

Homebuilder sentiment has also begun to improve, which may point to a pickup in new-housing inventory in the months ahead. Mortgage rates have also eased from their highs last year, further aiding affordability.