January existing-home sales down 1.3 percent
January’s total existing-home sales were down 1.3 percent to a seasonally-adjusted annual rate of 5.46 million, though overall sales increased year-over-year—up 9.6 percent from last year.
NAR’s chief economist, Lawrence Yun remains optimistic. “Existing-home sales are off to a strong start at 5.46 million,” he explains. “The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales.”
Supply stifling affordability
Median existing-home prices increased in every region—up 6.8 percent from last year, marking 95 straight months of year-over-year gains. “Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” says Yun.
Total housing inventory was up 2.2 percent from December but down 10.7 percent from last year—totaling 1.42 million units—the lowest level for January since 1999. Unsold inventory is at a 3.1-month supply.
According to NAR’s latest quarterly report, the majority of metro areas experienced price gains while simultaneously seeing only slight increases in inventory.
Millennials moving into the market
First-time buyers comprised 32 percent of January’s sales, up from December’s 31 percent and last year’s 29 percent. “It is good to see first-time buyers slowly stepping into the market,” says Yun. “The rise in the homeownership rate among the younger adults, under 35, and minority households means an increasing number of Americans can build wealth by owning real estate. Still in order to further expand opportunities, significantly more inventory and home construction are needed at the affordable price points.”
January’s hottest metro areas include:
- Fort Wayne, Ind.
- San Francisco-Oakland-Hayward, Calif.
- Sacramento-Roseville-Arden-Arcade, Calif.
- Lafayette-West Lafayette, Ind.
- San Jose-Sunnyvale-Santa Clara, Calif.
The fight to combat affordability concerns
Freddie Mac reports the average commitment rate for a 30-year, conventional fixed-rate mortgage decreased to 3.62 percent, down from December’s 3.72 percent and last year’s 4.46 percent.
NAR’s President Vince Malta plans to continue to articulate the benefits of homeownership. “We are hopeful and also confident that home sales will improve this year,” he says. “NAR has and will continue to do its part in the industry, reiterating the social and economic benefits of homeownership and advancing conversations surrounding housing affordability concerns.”
Across the regions
While year-over-year sales were up in all four regions, a drastic decrease in the West brought nationwide numbers down.
January existing-home sales:
- Northeast: No movement in January at an annual rate of 730,000—up 7.4% from last year
- Midwest: Up 2.4% in January to an annual rate of 1.29 million—up 8.4% from last year
- South: Up 0.4% in January to an annual rate of 2.38 million—up 11.7% from last year
- West: Down 9.4% in January to an annual rate of 1.06 million—up 8.2% from last year