Despite Low Inventory And ‘Deteriorating Affordability,’ Existing-Home Sales Jumped 3.3%

Posted by Patrick Barnard on February 22, 2017 No Comments

Existing-home sales, including sales of single-family homes, townhouses, condominiums and co-ops, were at a seasonally adjusted annual rate of 5.69 million in January – an increase of 3.3% compared with an upwardly revised 5.51 million in December and an increase of 3.8% compared with 5.48 million in January 2016, according to the National Association of Realtors (NAR).

It was the strongest month for existing-home sales since February 2007, when they reached an annual pace of about 5.79 million, NAR says.

Looking at the four regions tracked in NAR’s monthly home sales report, sales in the West increased 6.6% compared with December; sales in the Northeast jumped 5.3%; and sales in the South rose 3.6%. Only the Midwest saw a decrease – existing-home sales there were down 1.5%, month over month.

The median price for all housing types in January was $228,900, an increase of 7.1% compared with $213,700 in January 2016.

As of the end of January, there were about 1.69 million existing homes available for sale – an increase of 2.4% compared with December but a decrease of 7.1% compared with one year earlier. That’s about a 3.6-month supply at the current sales pace (unchanged from December).

About 33% of all existing-home sales in January were to first-time buyers – the average for 2016 was 35%.

About 23% of all existing-home sales were all-cash transactions – up from 21% in December but down from 26% a year earlier. Individual investors, who account for many cash sales, purchased 15% of homes in January – unchanged from December but down from 17% a year ago. About 59% of investors paid in cash in January.

Distressed sales, including foreclosures and short sales, accounted for about 7% of existing-home sales in January – unchanged from December but down from 9% a year ago.

Lawrence Yun, chief economist for NAR, characterized the 3.3% month-over-month increase in home sales as “a prosperous start” to 2017. He indicated that the increase was rather remarkable when one considers that home buyers faced “inventory levels that are far from adequate and deteriorating affordability conditions.”

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