The National Association of Realtors says that sales of previously owned homes rose in January to a rate of over 6 million units. Wall Street had expected that to be less than that. January sales were 2.3% lower.
The number of homes for sale fell to a record low. At the end of January, there were 860,000 homes for sale. It would take 1.6 months to exhaust the inventory at the current sales pace. A 4 to 6 month supply is a balanced market. That is a new low.
Inventory is struggling to make the turn, as seller traffic is very low. Multiple bidding wars are still happening, according to Lawrence Yun, chief economist for the Realtors.
The median price of a home sold in January was $350,300, an increase of 15.4% from January 2021.
The price is skewed by the fact that most of the sales activity is on the higher end of the market. On the low end, supply is the most lean. The price of homes between $100,000 and $250,000 was down 23% from a year ago, while the price of homes between $750,000 and $1 million was up 33%. Sales of homes over $1 million were up 39%.
The homes are selling quickly with an average of 19 days to go under contract. When the market was strong a year ago, days-on-market was 21.
The sales are based on contracts that were signed in November and December. The 30-year fixed loan had an average rate of 3.2%. According to Mortgage News Daily, it is just over 4%.
27% of sales were made in cash, up from 19% a year ago. The investor share rose to 22% from 15% a year ago.
It may be because investors are popping out and we are seeing a pop in home sales.
Danielle Hale, chief economist for Realtor.com, said the major question is whether rising rates will quench housing demand that stems from a demographic tidal wave of young households at key homebuying ages.
In December, sales of newly-built homes, which are counted by contracts signed during the month not closings, increased by 12%. The low supply of existing homes for sale is making buyers turn to new construction. Supply chain and labor issues slow production as builders are not keeping up with demand.
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