In January, sales of previously occupied homes in the US dropped by 4.9% from December, reaching an annual adjusted rate of 4.08 million units. This decline is attributed to elevated mortgage rates and prices, which hinder affordability, even with a broader range of homes available. The national median home price increased by 4.8%, marking the 19th month of rising prices. Although sales were slightly up from January last year, they fell short of economists' expectations. First-time homebuyers, who represented a smaller market share, particularly feel the pinch from these rising costs.
Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve. When combined with elevated home prices, housing affordability remains a major challenge.
Rising home prices and elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have kept many prospective home shoppers on the sidelines, especially first-time buyers.
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