WASHINGTON • US home sales fell 1.2 percent in January to their worst pace in more than three years, as persistent affordability problems have put a harsh chill in the real estate market.

The National Association of Realtors said Thursday that sales of existing homes declined 1.2 percent. This is the slowest sales rate since November 2015.

US Home Sales FellDuring the past 12 months, sales have plunged 8.5 percent. Home buyers are increasingly priced out of the market.  Years of climbing prices and strained inventories have made ownership costly. A solid job market has done little to boost sales. The sharpest annual sales declines are homes priced less than $250,000.

 

January’s weak sales

“January’s weak sales pace was likely the result of the lingering effects of stock market volatility and lower consumer confidence in 2018,” said Joel Kan, associate vice president of industry surveys and forecasts at the Mortgage Bankers Association.

“Much of the January decrease was in the lower price tiers, which also tends to be where inventory is the tightest.”

Homes are sitting on the market longer, causing inventories to rise. Properties stayed on the market for an average of 49 days, up from 42 a year ago. The number of homes for sale has risen to 1.59 million from 1.52 million a year ago. But, inventories are still tight compared to historic averages.

Buyers may find some relief as average mortgage rates have declined this year and price growth has slowed.

The average interest charged on a 30-year, fixed rate mortgage this week was 4.35 percent this week. This is down from an average as high as 5 percent last year, according to mortgage buyer Freddie Mac.

The median sales price in January was $247,500, a slight increase of 2.8 percent from last year. After eclipsing wage gains for several years, home prices are now increasing at a slower rate than average hourly earnings.

“While the existing home sales numbers were not good, there were some green shoots that open up the possibility of accelerated sales in the spring,” said Robert Frick, a corporate economist at Navy Federal Credit Union. “Price growth continues to slow down, which, together with higher household incomes, is making homes more affordable to more people.”