Home sales defied the odds in January with an increase to a seasonally-adjusted annual rate of 6.69 million according to the National Association of Realtors (NAR)
– M-O-M: Total existing-home sales increased 0.6% month-over-month
– Y-O-Y: Total existing-home sales increased 23.7% year-over-year
Inventory continues to be a problem. Housing inventory in December was down 25.7% from one year ago. The reduction in inventory is continuing to push up prices. The median existing-home price was $303,900 a 14.1% increase year-over-year. Lawrence Yun, NAR’s chief economist, said in a statement, “Sales easily could have been even 20% higher if there had been more inventory and more choices.”
- When a house did hit the market it sold quickly. Properties typically remained on the market for 21 days a massive drop from January 2020 when it was 43 days.
Regionally, home sales and prices were mixed. The South, however, did see the most growth in both categories. With home sales jumping 25.1% annually and prices up 14.6% to a median price of $263,300. The South also saw the biggest month-over-month gains in home sales with a 3.2% increase.
Mortgage rates have been rising in recent weeks, but CNBC noted that these upward movement probably didn’t impact January’s numbers, “Mortgage rates sat near record lows in December, when most of the contracts on these sales would have been signed. That gave buyers additional purchasing power…” (CNBC)
On Wednesday, housing starts fell in a large part thanks to rising lumber costs. It is an interesting economic scenario. We have rising rates which should slow housing prices as borrowing costs rise. However, rising lumber prices discouraging building along with low inventory should have upward pressure on prices. It will be interesting to see which one factor has the biggest impact on prices the next few months.