MW Selling your house? Here's how long you'll have to wait for a buyer.

By Aarthi Swaminathan

A home listed on the market is selling at the slowest pace in five years, industry data shows

Selling your house? You might be in for a long wait.

Mortgage rates remained elevated throughout January, which has sapped the energy out of the housing market.

Even as the 30-year mortgage rate inched down 1 basis point to 6.95% on Jan. 30, home sales have stalled, according to industry sources.

Mortgage rates haven't changed much from a year ago. The 30-year rate averaged 6.63%, per Freddie Mac data. But buyers are getting weary of an unaffordable housing market.

Homes listed for sale on the market are selling at the slowest pace in five years, according to analysis from real-estate platform Realtor.com and brokerage Redfin $(RDFN)$.

Sales have slowed as buyers have backed away from the market. Mortgage rates are a big driver of home sales.

When rates rose at the end of 2024, buyers pulled back. Pending home sales, which refer to the number of contracts signed to purchase a home, fell 5.5% in December. It was the first drop in five months, according to data from the National Association of Realtors.

Homes on the market selling at the slowest pace in 5 years

Even though more sellers are coming to the market, the reception has been frosty.

The number of homes on the market increased in January by 11% as compared to the same period last year, Realtor.com said. The median price of homes for sale was $400,500.

(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

But buyers weren't interested: These homes spent 73 days on the market, which was the slowest pace for the month of January since 2020, Realtor.com said.

Redfin had similar stats. The company said that the typical home, per their data, took 54 days to go under contract, the longest since March 2020. Their data spanned the four weeks ending Jan. 26.

To be sure, the market was still moving faster than in the prepandemic era. The typical home for sale in January was still selling 11 days sooner than before the pandemic between 2017 and 2019, Realtor.com said.

But the pandemic was such a frenzied era for the housing market that consumers are still adjusting to the new normal. During the pandemic home-buying boom in 2022, the typical home was selling in just 35 days, Redfin said.

To afford a median-priced $377,000 home at a 7% mortgage rate, a home buyer would be facing a monthly mortgage payment of nearly $2,800, Redfin said. Five years ago, on January 30, 2020, the 30-year mortgage rate averaged 3.51%, per Freddie Mac.

When will the housing market recover?

The key that could unlock stagnation in the housing market is lower mortgage rates.

The lower that rates go, the more likely people will jump in to either purchase a home or refinance their mortgage.

The bump in mortgage activity after rates dropped last September indicates significant demand waiting for an opportunity.

Read more: Homeowners scramble to refinance as U.S. mortgage rates hit two-year lows

"A sustained recovery in the housing market would require market mortgage rates to fall a long way from their current level of around 7%," Oliver Allen, a senior U.S. economist at Pantheon Macroeconomics, wrote in a note.

When will that happen? Expect the Federal Reserve to ease its monetary policy over the course of this year, bringing down interest rates, Allen said.

Fannie Mae, which also backs residential mortgages, expects the 30-year rate to come down from the 7% level today to finish the year at 6.5%.

But that drop might not be enough to ignite the market, as the so-called lock-in effect still remains a hurdle.

Homeowners with ultralow rates are locked into their mortgages and hence not interested in selling, as buying would mean a more expensive home at a higher mortgage rate.

That lock-in effect has kept supply at a lower-than-normal level. The number of homes for sale on the market in January is still down 25% as compared to the typical levels seen between 2017 and 2019, Realtor.com said.

"The average interest rate on an existing mortgage remains barely over 4%, so even a relatively marked decline in market rates on new mortgages would still leave it prohibitively expensive for many existing homeowners to move," Allen said.

"Expect the frozen housing market to remain [icy] for a while yet," he added.

-Aarthi Swaminathan

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January 30, 2025 12:17 ET (17:17 GMT)

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