The numbers: Home sales rose in January as home buyers jumped on mortgage rates that were below 7% at the start of the year.

Sales activity rose to the highest level since August.

Sales of previously owned homes rose by 3.1% to an annual rate of 4 million in January, the National Association of Realtors said Thursday.

That’s the number of homes that would be sold over an entire year if sales took place at the same rate in every month as they did in January. The numbers are seasonally adjusted.

The increase in sales exceeded expectations on Wall Street, which was expecting a 3.97 million pace for January.

The December sales figure was revised to 3.88 million, up from an initial read of 3.78 million.

Compared with January 2023, home sales are down 1.7%.

Key details: The median price for an existing home in January rose 5.1% to $379,100, compared with the same month a year earlier. Prices are at an all-time high for the month of January.

Home prices are outpacing wage growth, the NAR noted, which was up 4.5% on a yearly basis in January.

Prices are still down from a peak in June 2022, when the median price of a resale home hit $413,800.

Around 16% of properties were sold above list price, the NAR said.

The total number of homes for sale in January rose 3.1% from the same time last year, to 1.01 million units.

Homes listed for sale remained on the market for 36 days on average, up from 29 days in the previous month.

Sales of existing homes were mostly up across the nation. Sales rose the most in the West, by 4.3%. The median price of a home in the region was $572,100.

All-cash buyers made up 32% of sales, the highest share since June 2014.

The share of individual investors or second-home buyers was 17%. About 28% of homes were sold to first-time home buyers.

Big picture: The housing market saw some demand return as the 30-year mortgage rate dipped below 7% in mid-December, leading to an uptick in sales in January.

But with rates moving higher, that recovery may be somewhat muted in the following months. With the Federal Reserve putting off an interest-rate cut in March, mortgage rates are over 7% once again. And home buyers are sensitive to rising rates, as seen by weekly applications data.

Changes in rates, no matter how small, make a difference, Realtor.com noted: For every half-percent drop in the mortgage rate, the monthly payment for the typical home falls by $120, which translates to a buyer saving $43,000 over the life of the 30-year mortgage.

What the Realtors said: “Multiple offers are common on mid-priced homes, and many homes were still sold within a month,” Lawrence Yun, the NAR’s chief economist, told reporters.

“The elevated share of cash deals—32%—indicated a market full of multiple offers and propelled by record-high housing wealth,” he added.

What’s next: “Of course, the next move in mortgage rates will be higher, so January’s firming may last another month or two (especially since existing-home sales are recorded at contract closing) but seems likely to dissipate by the spring,” Stephen Stanley, the chief U.S. economist at Santander U.S. Capital Markets, wrote in a note.

Hence, “all eyes are on the Fed now to cut rates this summer in order to provide relief to the buyers as well as stubborn sellers” who are locked into rock-bottom rates, Selma Hepp, the chief economist at CoreLogic, said in a statement. “Should they do so, existing-home sales should expect a better outlook for the remainder of the year.”

Market reaction: Real-estate-brokerage stocks such as Compass, Douglas Elliman, Redfin and Zillow were mixed in early trading Thursday. The yield on the 10-year note was over 4.3%.

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