The median home price fell 4.5% from December to January due to a slight increase in inventory and a fall in the pace of sales. Median prices are not seasonally adjusted so some decline at this time of year is considered normal. Prices remain almost 11% above those seen at this time last year, and many sellers continue to benefit from equity gains accrued in last year's substantial price recovery.
The annual pace of home sales was 4.6 million homes in January. This was down 5% from December and down 5% from the same month of the previous year. Severe winter weather likely affected home sales in many parts of the country in January; however, higher mortgage rates and prices, combined with new regulations, have also had a significant dampening effect on home sales. February has also seen more severe weather than usual and this will likely be reflected in next month's numbers. As we move out of the winter months, and lenders and consumers adjust to the changes in affordability and regulation, we should see sales begin to pick back up.
Inventory levels recovered in January after taking a bit of a dip in December. The total number of homes that were available for sale increased 2% from December to January to 1.9 million homes. This represents 4.9 months of inventory at the current sales pace, which is up 11.4% from last year and up 6.5% from the previous month. As we move further into the year, we should continue to see inventory loosen, giving buyers more choices.
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