Existing Home Sales Gain in January, but Inventory Concerns Remain

Existing home sales inched ahead in January to its highest annual rate in six months, the National Association of Realtors reported yesterday.

NAR said total existing home sales rose by 0.4 percent to a seasonally adjusted annual rate of 5.47 million in January from a downwardly revised 5.45 million in December. Sales are now 11.0 percent higher than a year ago, the largest year-over-year gain since July 2013.

Single-family home sales increased by 1.0 percent to 4.86 million in January from 4.81 million in December and improved by 11.2 percent higher from a year ago (4.37 million). The median existing single-family home price rose to $215,000 in January, up 8.3 percent from a year ago.

Existing condominium and co-op sales fell by 4.7 percent to 610,000 units in January from 640,000 in December, but came in 8.9 percent higher than a year ago (560,000 units). The median existing condo price rose to $203,900 in January, 7.4 percent above a year ago.

Regionally, only the West saw a decline. Sales in the Northeast increased by 2.7 percent to 760,000, and by 20.6 percent from a year ago. The median price in the Northeast rose to $247,500, up 0.9 percent from a year ago. In the Midwest, sales rose by 4.0 percent to an 1.30 million in January and by 18.2 percent from a year ago. The median price in the Midwest rose to $164,300, up 8.7 percent.

Sales in the South were unchanged at 2.24 million in January (unchanged from December) and up by 5.7 percent from a year ago. The median price in the South rose to $184,800, up 8.5 percent from a year ago. Sales in the West decreased by 4.1 percent to 1.17 million in January, improved by 8.3 percent from a year ago. The median price in the West rose to $309,400, up 7.4 percent from a year ago.

“The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints,” said NAR Chief Economist Lawrence Yun. “Despite the global economic slowdown, the housing sector continues to recover and will likely help the U.S. economy avoid a recession.”

NAR reported the median existing-home price for all housing types in January rose to $213,800, up 8.2 percent from January 2015 ($197,600). Last month’s price increase was the largest since April 2015 (8.5 percent) and marks the 47th consecutive month of year-over-year gains.

Total existing home inventory at the end of January increased by 3.4 percent to 1.82 million but is still 2.2 percent lower than a year ago (1.86 million). Unsold inventory is at a 4.0-month supply at the current sales pace, up slightly from 3.9 months in December.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said tight supply levels could restrain sales in coming months.

“While total housing inventory rose 3.4 percent during the month, inventories remain exceptionally lean and are still 2.2 percent below their year-ago level,” Vitner said. “With the spring buying season quickly approaching, supply levels must pick up substantially in order to meet growing demand.”

NAR said the share of first-time buyers remained at 32 percent in January for the second consecutive month and is up from 28 percent a year ago. First-time buyers in all of 2015 represented an average of 30 percent, up from 29 percent in both 2014 and 2013.

All-cash sales were 26 percent of transactions in January (24 percent in December), down from 27 percent a year ago. Individual investors purchased 17 percent of homes in January (15 percent in December), matching the highest share since last January. Sixty-seven percent of investors paid cash in January.

The report said properties typically stayed on the market for 64 days in January, an increase from 58 days in December but below the 69 days in January 2015. Short sales were on the market the longest at a median of 77 days in January, while foreclosures sold in 57 days and non-distressed homes took 61 days. Thirty-two percent of homes sold in January were on the market for less than a month.

Distressed sales rose slightly to 9 percent in January, up from 8 percent in December but down from 11 percent a year ago. Seven percent of January sales were foreclosures; 2 percent were short sales. Foreclosures sold for an average discount of 13 percent below market value in January (16 percent in December), while short sales were discounted 12 percent (15 percent in December).