Home sales nationwide in January were up 6% from a year ago and are 39% higher than in 2020, according to Zillow’s first monthly market report of 2023. Buyers took advantage of slightly lower mortgage rates in January, but sellers have yet to join the fray. The number of homes for sale is the second-lowest on record, which likely means there will be stiff competition for well-priced homes this spring, according to the report.
“Now as a buyer, you can slow down, have your inspection and make a strong, well-informed offer,” said Ryan Platzke, Realtor at Helgeson/Platzke Real Estate Group and member of Zillow’s Premier Agent program in Minneapolis. “And as a seller you are still in a very good position; you won’t see the 10 offers all cash, noncontingent, etc. But you will see one, maybe three offers, usually that first or second weekend, where you’ll be able to select which one to go forward with and comfortably make a decision.”
The typical U.S. home value was nearly flat from December to January, slipping just 0.1% and resting at $329,542, or 4.1% below the peak value set in July 2022. Despite the recent drop, it remains 6.2% higher than a year ago, and 39% higher than before the pandemic.
This is the first monthly market report that refers to the newly launched version of the Zillow Home Value Index (ZHVI), now based on the neural network-driven Zestimates formula that Zillow produces for nearly every home in the United States. The new ZHVI, like the neural Zestimate, now better reflects seasonal changes, according to the company.
What mortgage rates do next will have a huge impact on the market’s momentum, Zillow said.
Meanwhile, in Florida the housing market started 2023 with higher median prices and more inventory in January, compared to a year ago, according to Florida Realtors’ latest housing data.
However, inflation and still rising interest rates above 6% continued to erode buyer demand, the association said in a press release. In January, the statewide median sales price for single-family existing homes in Florida was $389,990, up 4% from the previous year; for condo-townhouse units, it was $310,000, up 8.8% over January 2022.
Closed sales of single-family homes statewide last month totaled 14,766, down 32.5% year-over-year, while existing condo-townhouse sales totaled 6,078, down 40.7% from January 2022, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations.
According to Florida Realtors Chief Economist Dr. Brad O’Connor, the decline in sales is not surprising since interest rates remain twice as high as a year ago; however, he noted the January drop in sales “is the smallest year-over-year decline we’ve had since last October.”
O’Connor also pointed out that the level of closed statewide sales for existing homes and condo-townhouse properties in Florida in recent months is tracking just below the level of sales the state experienced four years ago, prior to the pandemic.
“High mortgage rates are not only affecting homebuyers,” he said. “They’re also discouraging some potential sellers from listing their homes for sale, as well. As a result, the level of new listings we’ve seen in recent months has been below normal and that trend also continued into January.”
New listings of existing single-family homes for sale were down 4.8% compared to a year ago. Over in the townhouse and condo category, the year-over-year decline in new listings was more modest at 2.4%. It’s important to remember that while these high interest rates are discouraging some potential sellers from listing their homes for sale, that’s not the case for all sellers, O’Connor said.
In other states, the decline in home sales was more significant. The Pennsylvania housing market saw a 27% decline in the number of sales in January, according to a report prepared for the Pennsylvania Association of Realtors (PAR). The number of sales was just under 7,000, compared to 9,176 in December.
“The real estate market traditionally has seen fewer sales in the winter months. Sales are down about 30% from the same time last year, however that’s due to a number of reasons,” said PAR President Al Perry. “We’ve continued to see a declining number of homes on the market and interest rates are around 6%.”
The number of listings in January was 30,513, down 16.5% year over year. “The number of listings has continued to drop over the past several years and there are currently about 28,000 fewer homes on the market than in January 2020,” Perry said.
Home prices remain steady. The median sales price of homes sold was $195,123 in January, up 2.5% year over year.
“There’s still strong consumer interest in buying a home and strategically priced homes are selling fairly quickly,” he added.