Home Sales Fall: Weather Disruptions and Rising Costs Weigh on the Market

This week was quiet for mortgage markets, with little major economic data released. As expected, housing reports showed weakness in January, particularly in regions impacted by severe weather. Mortgage rates held steady and ended the week with little change.

Existing Home Sales Slip After December Gains

Sales of existing homes dropped 5 percent in January compared to December, although they remained slightly higher than one year ago. The median existing home price reached 396,900 dollars, up 5 percent year over year and setting a new record for January. Inventory levels remain historically low at a 3.5 month supply nationwide, well below the six month level typically associated with a balanced market. However, inventory was 17 percent higher than the same time last year. For real estate, low inventory continues to limit buyer options, but the year over year increase in available homes may bring some relief. Sellers may benefit from record pricing, though market momentum may vary depending on local weather impacts and buyer confidence.

Home Building Activity Drops Sharply

January housing starts fell 10 percent from December, reflecting both the effects of severe weather and broader hesitation in the construction sector. Single family starts declined 8 percent month over month and were slightly lower than last year. Single family building permits, which are less sensitive to weather and serve as a leading indicator, were mostly flat. Meanwhile, a builder sentiment survey from the National Association of Home Builders saw a sharp decline, with concerns centered on tariffs, high mortgage rates, and rising material costs. For buyers, reduced home construction may worsen inventory challenges, especially for new homes. Sellers should be aware that lower building activity may support pricing, but concerns among builders suggest caution about future demand.

Mortgage Applications Reflect Cautious Market Activity

According to the Mortgage Bankers Association, refinance applications declined 7 percent from the prior week but remained 39 percent higher than one year ago. Purchase applications fell 6 percent from the week before but were slightly higher compared to the same period last year. For the housing market, the dip in applications signals that some buyers may be holding back, possibly due to weather disruptions or concerns over affordability. However, the year over year gains suggest steady interest that could pick up with improving conditions and greater rate stability.

What This Means for Real Estate

Seasonal challenges, rising costs, and cautious sentiment continue to shape the housing market. For buyers, weather related slowdowns may offer a temporary pause in competition, but tight inventory and steady demand remain key factors. For sellers, elevated home prices provide opportunity, though pricing strategy and timing will be increasingly important as market conditions evolve.

Keeping an eye on local and national trends will help you stay ahead in today’s real estate market. Whether you are buying or selling, informed decisions lead to better outcomes.