Existing home sales increased in January to a seasonally adjusted annual rate of 6.5 million, a significant upward move following a decrease in December, according to the National Association of Realtors (NAR). Total existing sales, which includes single-family homes, townhomes, condominiums, and co-ops, increased 6.7% from December. On a year-over-year (YOY) basis, sales fell 2.3%, according to the NAR.
“Buyers were likely anticipating further rate increases and locking-in at the low rates, and investors added to overall demand with all-cash offers,” says Lawrence Yun, NAR’s chief economist. “Consequently, housing prices continue to move solidly higher.”
Housing inventory at the end of January totaled 860,000 units, a 2.3% decrease from December and a 16.5% decrease compared with January 2021. Unsold inventory sits at a 1.6-month supply at the current sales pace, down from 1.7 months in December and from 1.9 months a year ago. Yun says the inventory of homes on the market “remains woefully depleted” and is currently at an all-time low.
According to Yun, homes priced at $500,000 and below are “disappearing,” while supply has risen at higher price ranges. Yun forecasts that such increases will continue to shift the mix of buyers toward high-income consumers.
“There are more listings at the upper end—homes prices above $500,000—compared to a year ago, which should lead to less hurried decisions by some buyers,” Yun says. “Clearly, more supply is needed at the lower end of the market in order to achieve more equitable distribution of housing wealth.”
The median existing home price for all housing types in January was $350,300, a 15.4% increase from January 2021, as prices increased in all four regions of the U.S. The growth marks 119 consecutive months of YOY increases, the longest running streak on record, according to the NAR.
Properties typically remained on the market for 19 days in January, in line with December and down two days from January 2021. Seventy-nine percent of homes sold in January were on the market for less than a month.
First-time buyers were responsible for 27% of sales in January, down from 30% in December and 33% in January 2021. Individual investors or second-home buyers accounted for 22% of home purchases in January, and all-cash sales accounted for 27% of transactions during the month.
Yun projects that forthcoming increases in mortgage rates will be problematic for both moderate-income buyers and consumers in expensive markets. Moderate-income buyers who barely qualified for mortgages when interest rates were lower likely will now be unable to afford a mortgage while consumers in expensive markets will “feel the sting of nearly an additional $500 to $1,000 in monthly payments due to rising rates,” according to Yun.
Single-family home sales increased to a seasonally adjusted annual rate of 5.76 million in January, up 6.5% from December but down 2.4% on a YOY basis. The median existing single-family home prices was $357,100 in January, a 15.9% YOY increase.
Existing home sales increased on a monthly basis in each of the four major U.S. regions in January. On a YOY basis, activity was mixed, with two regions reporting sagging sales, one region remaining flat, and one experiencing an increase in sales.
Existing home sales in the Northeast increased 6.8% in January but decreased 8.2% compared with January 2021. Sales in the Midwest increased 4.1% compared with December and remained equal with the levels seen in January 2021. The South saw sales rise by 9.3% in January compared with December and by 0.3% on a YOY basis. For the fifth straight month, the South witnessed the highest pace of price appreciation, according to the NAR. Existing sales in the West increased 4.1% from the previous month and decreased 6.6% compared with a year ago.
