Existing-home sales rose in January, making a notable move upward following a previous month where sales declined, according to the National Association of Realtors®. On a month-over-month basis, each of the four major U.S. regions experienced an increase in sales in January. However, year-over-year, activity was mixed as two regions reported sagging sales, another watched sales increase and a fourth region remained flat.
Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 6.7% from December to a seasonally adjusted annual rate of 6.50 million in January. Year-over-year, sales fell 2.3% (6.65 million in January 2021).
“Buyers were likely anticipating further rate increases and locking-in at the low rates, and investors added to overall demand with all-cash offers,” said Lawrence Yun, NAR’s chief economist. “Consequently, housing prices continue to move solidly higher.”
Total housing inventory2 at the end of January amounted to 860,000 units, down 2.3% from December and down 16.5% from one year ago (1.03 million). Unsold inventory sits at a 1.6-month supply at the current sales pace, down from 1.7 months in December and from 1.9 months in January 2021.
“The inventory of homes on the market remains woefully depleted, and in fact is currently at an all-time low,” Yun said.
According to Yun, homes priced at $500,000 and below are disappearing, while supply has risen at the higher price range. He noted that such increases will continue to shift the mix of buyers toward high-income consumers.
“There are more listings at the upper end – homes priced above $500,000 – compared to a year ago, which should lead to less hurried decisions by some buyers,” Yun added. “Clearly, more supply is needed at the lower-end of the market in order to achieve more equitable distribution of housing wealth.”
The median existing-home price3 for all housing types in January was $350,300, up 15.4% from January 2021 ($303,600), as prices rose in each region. This marks 119 consecutive months of year-over-year increases, the longest-running streak on record.
Properties typically remained on the market for 19 days in January, equal to days on market for December, and down from 21 days in January 2021. Seventy-nine percent of homes sold in January 2022 were on the market for less than a month.
First-time buyers were responsible for 27% of sales in January, down from 30% in December and down from 33% in January 2021. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 20214 – reported that the annual share of first-time buyers was 34%.
Yun explained that the forthcoming increase in mortgage rates will be problematic for at least two market segments.
“First, some moderate-income buyers who barely qualified for a mortgage when interest rates were lower will now be unable to afford a mortgage,” he said. “Second, consumers in expensive markets, such as California and the New York City metro area, will feel the sting of nearly an additional $500 to $1000 in monthly payments due to rising rates.”
Individual investors or second-home buyers, who make up many cash sales, purchased 22% of homes in January, up from 17% in December and from 15% in January 2021. All-cash sales accounted for 27% of transactions in January, up from 23% in December and from 19% in January 2021.
Distressed sales5 – foreclosures and short sales – represented less than 1% of sales in January, equal to the percentage seen in both December and January 2021.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.45% in January, up from 3.10% in December. The average commitment rate across all of 2021 was 2.96%