Existing-home sales fell in January by 1.3% to a seasonally adjusted rate of 5.46 million, according to the National Association of Realtors (NAR).
January, though, was the second straight month overall sales increased year-over-year, rising 9.6% from January 2019.
“Existing-home sales are off to a strong start at 5.46 million,” Yun said. “The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales,” said Lawrence Yun, NAR’s Chief Economist.
The median home prices for the month rose 6.8% annually to $266,300. Home prices this last year were $249,400. Prices rose in every region.
“Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” Yun said.
Total housing inventory at the end of January was 1.42 million units—up 2.2% from December but down 10.7% from last year. The housing inventory level in January is the lowest level recorded since 1999.
“Strong U.S. economic conditions, low mortgage rates, and aging millennials have bolstered buyer optimism and demand for housing, but supply has been a very literal missing piece of the puzzle, which is why we forecast somewhat weaker home sales in 2020,” said Danielle Hale, Chief Economist at realtor.com. “With builder optimism high and home construction starting the year on a high note, the pieces are starting to come together for some improvement, but with the building shortage spanning more than a decade at this point, we won't see an end to the shortage overnight.”
Unsold inventory sits at a 3.1-month supply at the current sales pace, up from the 3.0-month figure recorded in December and down from the 3.8-month figure recorded in January 2019.
Thirty-two percent of all sales in January were from first-time buyers, which is a slight increase of December’s 31% and January 2019’s 29%.
“It is good to see first-time buyers slowly stepping into the market,” Yun said. “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.”
Holden Lewis, Home and Mortgage Expert at NerdWallet summed up the report by saying, “there aren’t enough homes for sale.”
“Home sales would be higher if more were on the market. This number was within the expected range of existing home sales, but it's disappointing from the standpoint that many thousands of would-be buyers are thwarted by paltry inventories of affordable homes for sale. Prices rose 6.8% year-over-year—not enough to induce more owners to put up ‘for sale’ signs,” Lewis said.