U.S. Existing Home Sales (January 2025)

U.S. existing home sales start 2025 on a soft note 

• Existing home sales fell 4.9% month-on-month (m/m) to 4.08 million units (annualized) in January. This was below market expectations, which called for a print of 4.13 million. Sales were still 2% higher than a year ago.
• Sales declines were broad based across segments, with single-family sales falling 5.2% m/m, and those in the smaller condo/co-op segment falling 2.4% m/m.
• Activity declined across most Census regions, with sales falling 7.4% (m/m) in the West, 6.2% in the South, and 5.7% in the Northeast. Sales in the Midwest held flat at 1.0 million for the third month on a row. 
• Total housing inventory at the end of January was 1.18 million, up 3.5% from December and 16.8% from one year ago (1.01 million). Measured at the current sales rate and seasonally adjusting, unsold inventory sat at 3.9 months' supply – up from 3.7 months in December and 3.5 months in January 2024. 
• House price growth lost some steam in January, with year-on-year gains easing to 4.8% from 5.8% in the month prior. On a seasonally adjusted basis, median home prices were essentially flat, rising only 0.1% m/m – a steep deceleration from the average 0.9% pace in the preceding four months (seasonal adjustment performed by TD Economics).

Key Implications

• Existing home sales fell in January, breaking the 3-month winning streak that developed at the end of last year. This result was not entirely surprising given the elevated mortgage rate environment that persisted at the turn of the year, with rates hovering near 7%. The one positive tidbit in today's report is the mild increase in inventory levels. To be clear, while housing inventories are still quite low compared to historical norms, the January increase is a step in the right direction. 
• Mortgage rates remain stubbornly high and a downtrend in mortgage purchase applications for the four weeks ending in mid-February points to additional softness in sales over the near-term. Additionally, rising trade tensions, which have the potential to boost inflationary pressures, have clouded the near-term economic and rate outlook. Still, we anticipate the summer will bring greater clarity. Assuming the adverse scenario of steep blanket tariffs can be avoided, the Fed should be able to resume modest rate cuts later this year. In turn, the lower rate environment should help support a steadier recovery in the housing market (for more see here). 

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