Existing home sales were down 8.5 percent in January from a year ago and dropped 1.2 percent month over month according to the latest Existing-home sales report released by the National Association of Realtors (NAR) on Thursday.
A seasonally adjusted rate of 4.94 million existing home sales in January also marked the lowest level of sales since November 2015, marking a cyclical low according to Lawrence Yun, Chief Economist at NAR. The Northeast was the only region that saw an uptick in sales during the month, the report indicated.
The report, which also records the median prices for existing homes indicated that in January, home prices were up 2.8 percent at $247,500 from the same period last year, marking the 83rd month of consecutive year-over-year price gains. Despite these increases, Yun said that median home price growth was the slowest since February 2012.
“Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low,” he said. “Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.”
Another factor that was likely to lead to more home sales in the spring buying season was the lower mortgage rates compared with December 2018. While they had little impact on home sales in January, Yun projected that the lower rates would "inevitably lead to more home sales."
Despite rising inventory, housing supply continued to remain an area of concern especially at the lower end of the market. The total housing inventory, according to the report, increased to 1.59 million from 1.53 million in the prior month. Unsold inventory was at a 3.9 months' supply at the current sales pace, up from 3.7 months in December and 3.4 months during the same time last year.
“Taking steps to lower construction costs would be a tremendous help. Local zoning ordinances should also be reformed, while the housing permitting process must be expedited; these simple acts would immediately increase homeownership opportunities and boost local economies,” Yun said.