Existing-home sales fell for the third consecutive month in January, according to the National Association of Realtors. Of the four major U.S. regions, only the Northeast saw an uptick in sales activity last month.
Total existing-home sales decreased 1.2% from December to a seasonally adjusted annual rate of 4.94 million in January. Sales were down 8.5% from a year earlier (5.40 million in January 2018).
January existing-home sales in the Northeast increased 2.9% to an annual rate of 700,000, 1.4% below a year ago. The median price in the Northeast was $270,000, which is up 0.4% from January 2018. In the Midwest, existing-home sales fell 2.5% from last month to an annual rate of 1.16 million in January, down 7.9% overall from a year ago. The median price in the Midwest was $189,700, which is up 1.4% from last year. Existing-home sales in the South dropped 1.0% to an annual rate of 2.08 million in January, down 8.4% from last year. The median price in the South was $214,800, up 2.5% from a year ago. Existing-home sales in the West dipped 2.9% to an annual rate of 1.00 million in January, 13.8% below a year ago. The median price in the West was $374,600, up 2.9% from January 2018.
Lawrence Yun, NAR’s chief economist, said last month’s home sales of 4.94 million were the lowest since November 2015, but also said he does not expect the numbers to decline further going forward. “Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low. Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.”
The median existing-home price for all housing types in January was $247,500, up 2.8% from January 2018 ($240,800). January’s price increase marks the 83rd straight month of year-over-year gains.
Yun noted that this median home price growth is the slowest since February 2012 and is cautious that the figures do not yet tell the full story for the month of January. “Lower mortgage rates from December 2018 had little impact on January sales, however, the lower rates will inevitably lead to more home sales.”
Joel Kan, associate vp of Industry Surveys and Forecasts at the Mortgage Bankers Association, said, “Existing-home sales decreased in January and have now fallen year-over-year for five straight months. January’s weak sales pace was likely the result of the lingering effects of stock market volatility and lower consumer confidence toward the end of 2018. Much of the January decrease was in the lower price tiers, which also tends to be where inventory is the tightest. Looking ahead, we do expect that lower rates and rising entry-level supply should lead to more sales – especially for eager first-time buyers, who only represented 29% of sales in January (compared to 32% in December). Fundamental drivers of purchase activity, like the strong job market and favorable demographics, also remain in place, and should help prospective buyers find success in the coming months.”
Total housing inventory at the end of January increased to 1.59 million, up from 1.53 million existing homes available for sale in December, and represents an increase from 1.52 million a year ago. Unsold inventory is at a 3.9-month supply at the current sales pace, up from 3.7 months in December and from 3.4 months in January 2018.
Properties remained on the market for an average of 49 days in January, up from 46 days in December and 42 days a year ago. 38% of homes sold in January were on the market for less than a month.
While total inventory grew (on a year-over-year basis) for the sixth straight month, Yun said the market is still suffering from an inventory shortage. “In particular, the lower end of the market is experiencing a greater shortage, and more home construction is needed,” says Yun. “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.”
Realtor.com®’s Market Hotness Index, measuring time-on-the-market data and listing views per property, revealed that the hottest metro areas in January were Midland, Texas; Chico, California; San Francisco-Oakland-Hayward, California; Fort Wayne, Indiana; and Colorado Springs, Colorado.
First-time buyers were responsible for 29% of sales in January, down from last month (32%), but the same as a year ago. NAR’s 2018 Profile of Home Buyers and Sellers – released in late 20184 – revealed that the annual share of first-time buyers was 33%.
All-cash sales accounted for 23% of transactions in January, up from December and a year ago (22% in both cases). Individual investors, who account for many cash sales, purchased 16% of homes in January, up from 15% in December, but down from a year ago (17%).
Distressed sales – foreclosures and short sales – represented 4% of sales in January, up from 2% last month and down from 5% a year ago. One% of January sales were short sales.
Single-family home sales sit at a seasonally adjusted annual rate of 4.37 million in January, down from 4.45 million in December and 8.4% below the 4.77 million sales pace from a year ago. The median existing single-family home price was $249,400 in January, up 3.1% from January 2018.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 570,000 units in January, up 3.6% from last month and down 9.5% from a year ago. The median existing condo price was $233,000 in January, which is up 0.1% from a year ago.
