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NAR: Jan. Home Sales Drop 1.3% but Are Up 9.6% Year-to-Year

Economist Yun says existing-home sales are off to a strong start, and the “trend line for housing starts is increasing … which should ultimately lead to more home sales.”

WASHINGTON – Existing-home sales declined in January, continuing a fluctuating pattern of monthly increases and declines, according to the National Association of Realtors® (NAR). Significant declines in the West region dragged down nationwide numbers, with the other three major U.S. regions reporting marginal – or no – changes last month.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – decreased 1.3% from December to a seasonally-adjusted annual rate of 5.46 million in January. However, for the second straight month, overall sales substantially increased year-over-year – up 9.6% from a year ago (4.98 million in January 2019).

Lawrence Yun, NAR’s chief economist, finds the outlook for 2020 home sales promising despite the drop in January.

“Existing-home sales are off to a strong start at 5.46 million.” Yun says. “The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales.”

The median existing-home price for all housing types in January was $266,300, up 6.8% over January 2019 ($249,400), as prices increased in every region. December’s price increase marks 95 straight months of year-over-year gains.

“Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” Yun says.

Total housing inventory at the end of January totaled 1.42 million units – up 2.2% from December but down 10.7% year-to-year (1.59 million). The housing inventory level for January is at its lowest level since 1999. Unsold inventory is at a 3.1-month supply at the current sales pace, up from a 3.0-month figure recorded in December and down from a 3.8-month figure recorded in January 2019.

Properties typically remained on the market for 43 days in January, seasonally up from 41 days in December but down from 49 days in January 2019 – and 42% of homes January home sales were on the market for less than a month.

First-time buyers were responsible for 32% of sales in January, up from 31% in December and 29% one year earlier.

“It is good to see first-time buyers slowly stepping into the market,” Yun says. “The rise in the homeownership rate among the younger adults, under 35, and minority households means an increasing number of Americans can build wealth by owning real estate. Still, in order to further expand opportunities, significantly more inventory and home construction are needed at the affordable price points.”

Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in January. That’s unchanged compared to the previous month and up slightly from 16% in January 2019. All-cash sales accounted for 21% of transactions in January, up from 20% in December but down from 23% in January 2019.

Distressed sales – foreclosures and short sales – represented 2% of sales in January, unchanged both month-to-month and year-to-year.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.62% in January, down from 3.72% in December. One year ago, the commitment rate was 4.46%.

“We are hopeful and also confident that home sales will improve this year,” says NAR President Vince Malta. “NAR has and will continue to do its part in the industry, reiterating the social and economic benefits of homeownership and advancing conversations surrounding housing affordability concerns.”

Single-family and condo/co-op sales: Single-family home sales sat at a seasonally-adjusted annual rate of 4.85 million in January, down from 4.91 million in December but up 9.7% year-to-year. The median existing single-family home price was $268,600 in January 2020, up 6.9% from January 2019.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 610,000 units in January, down 1.6% from December but 8.9% higher than a year ago. The median existing condo price was $248,100 in January, an increase of 5.7% from a year ago.

Regional breakdown: Compared to December, January sales increased in the Midwest and the South, while year-over-year sales rose in each of the four regions. Median home prices in all regions increased from one year ago, with the Northeast region showing the strongest price gain.

January 2020 existing-home sales in the Northeast saw no movement, recording an annual rate of 730,000, which is up 7.4% year-to-year. The median price in the Northeast was $312,100, up 11.5% from January 2019.

Existing-home sales increased 2.4% in the Midwest to an annual rate of 1.29 million, up 8.4% year-to-year. The median price in the Midwest was $200,000, a 5.4% increase from last January.

Existing-home sales in the South grew 0.4% to an annual rate of 2.38 million in January, up 11.7% from a year ago. The median price in the South was $229,900, a 6.3% increase from this time last year.

Existing-home sales in the West fell 9.4% to an annual rate of 1.06 million in January, an 8.2% increase from a year ago. The median price in the West was $393,800, up 5.2% from January 2019.

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