Home sales skyrocketed in January: Is the real estate market recovering?

Real Estate Market
  • The home sales index jumped 8.1% last month, the biggest monthly increase since June 2020.
  • Economists expected an increase in sales of only 1%.
  • The markets reacted positively, as they understand that the economy remains strong despite the efforts of the Fed.

US home sales soared 8.1% in January, marking the biggest monthly rise since June 2020, signaling that the housing market may be headed for a full recovery. Economists expected an increase of just 1%.

Transfers within the National Association of Realtors’ Pending Home Sales Index remain in the red on a year-over-year basis, down nearly 24%.

Declining home prices and lower mortgage rates favored buyers, NAR chief economist Lawrence Yun said in a statement.

According to NAR, the economy will remain strong in 2023 and many jobs will be added. In addition, the 30-year mortgage rate will be around 6.1% this year and 5.4% in 2024.

It should be noted that the analyst believes that annual sales of existing homes will close this year with a drop of 11.1% and then shoot up 17.7% in 2024. As for new homes, they will fall 3.7% in 2023 and they will rise 19.4% next year, he predicts.

“Home sales activity appears to be bottoming out in the first quarter of this year, before any incremental improvements occur. But there won’t be an annual gain in home sales until 2024. In the meantime, home prices will hold steady across most of the country with a minor change in the national median home price.”

And a.

“ When rates went up and down in the fall, many buyers walked away because they could wake up the day after finding their dream home with a triple-digit increase in their potential monthly payment. They now have a better idea of ​​how far their budget will go in which neighborhoods and which houses they can afford,” added Redfin economics research lead Chen Zhao.

The main US indices reacted positively and rose on Monday: the Nasdaq jumped 0.7%, the Dow Jones 0.15% and the S&P 500 0.3%.