Blame it on the housing shortage: Existing-home sales posted their largest declines on an annual basis in more than three years, the National Association of REALTORS® reported Wednesday. All major regions of the U.S. saw monthly and annual sales decline in January.
“The utter lack of sufficient housing supply and its influence on home prices muted overall sales activity in much of the U.S. last month,” says Lawrence Yun, NAR’s chief economist. “While the good news is that REALTORS® in most areas are saying buyer traffic is even stronger than the beginning of last year, sales failed to follow course and far lagged last January’s pace. It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to clam the speedy price growth.”
Existing-home sales, which are completed transactions for single-family homes, townhomes, condos, and co-ops, dropped 3.2 percent in January to a seasonally adjusted annual rate of 5.38 million, NAR reports. It is the second consecutive month that existing-home sales have posted declines. Sales are now 4.8 percent below levels from a year ago and are at the slowest pace since last September.
A Closer Look
The following are highlights from NAR’s existing-home sales report, reflecting the latest January sales data:
- Home prices: The median existing-home price for all housing types was $240,500 in January, up 5.8 percent from a year ago.
- Days on the market: Forty-three percent of homes sold in January were on the market for less than a month. Properties stayed on the market an average of 42 days in January, down from 50 days a year ago.
- All-cash sales: All-cash sales comprised 22 percent of transactions in January, down from 23 percent a year ago. Individual investors tend to make up the biggest bulk of all-cash sales. They accounted for 17 percent of sales in January, up from 16 percent a year ago.
- Distressed sales: Foreclosures and short sales made up 5 percent of sales in January, down from 7 percent a year ago. Broken out, four percent of sales in January were foreclosures and 1 percent was short sales.
- Inventory: Total housing inventory at the end of January increased 4.1 percent to 1.52 million existing homes for sale. Inventories are still 9.5 percent lower than a year ago. Unsold inventory is at a 3.4-month supply at the current sales pace.
“The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability,” says Yun. “However, there’s hope that the tide is finally turning. There was a nice jump in new home construction in January and homebuilder confidence is high. These two factors will hopefully lay the foundation for the building industry to meaningfully ramp up production as this year progresses.”