Homebuyers flocked to what little existing inventory there was in January, as sales of existing homes rose 6.7% from the previous month to a seasonally adjusted annual rate of 6.5 million.
January sales fell 2.3% from a year earlier, although the median price of existing homes rose 15.4% annually to $350,000, according to Friday’s report from the National Association of Realtors.
The supply of homes for sale fell to a record low, down 16.5% from a year ago. There were only 860,000 homes for sale at the end of January, according to the report. This translates to just 1.6 months of supply; a healthy market usually has between four and six months’ supply.
“Buyers were likely anticipating further rate hikes and hanging on to low rates, and investors added to aggregate demand with all-cash offers,” said Lawrence Yun, chief economist at NAR.
Indeed, January saw the highest pace of existing home sales in a year, even as home prices rose 1.8% from December and mortgage rates jumped 30 basis points.
Homes priced between $100,000 and $250,000 are down 23% from January 2021, while sales of homes priced between $750,000 and $1 million are up 33% %. Sales of homes priced over $1 million are up 39%. Homes were contracted in just 19 days on average, compared to 21 a year ago.
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“While January’s 6.7% sales growth was good news, the fall in inventory for sale to a record high of 860,000 units is concerning,” said Joel Kan, assistant vice president of economic forecasting and sectors of the Mortgage Bankers Association. . “There were more listings at the higher end of the market and the median sale price rose for the third month in a row, suggesting fewer entry-level and cheaper options, making buying conditions more difficult for first-time buyers, with their share of sales falling to 27% from 33% a year earlier.
As Home Builders Close In delivery of new homes, they remain stuck with ongoing global supply chain issues. Home builders are still struggling to source lumber, windows and appliances. Garage doors take months to arrive, delaying closings.
The good news is that there are several directions where more supply can come from, said Matthew Speakman, economist at Zillow.
“From new construction, to an aging population of baby boomers choosing to downsize and list their homes, to people feeling more confident as pandemic fears ease and/or to those sellers looking to capitalize on huge equity gains over the past few years,” he mentioned. “The other good news is that even despite a very limited selection, shoppers are finding ways to close deals, keeping sales volume high as the spring shopping season approaches.