Economy: Existing Home Sales During January 2018

The Existing Home Sales report for January 2018 was released by The National Association of Realtors® (NAR) this morning:

Predicted: 5,650,000
Actual: 5,380,000

Change from Previous Month: -3.2%
Change from One Year Previous: -4.8%

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Inventory: 1,520,000 (3.4 months supply)

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The yellow-highlighted, "actual" figure above represents the preliminary, seasonally adjusted annualized sales count of existing homes, co-ops and condominiums for the indicated month. The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

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Median Price for A Used Home During January 2018: $240,500

Change from One Year Previous: +5.8%

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Average Price for A Used Home During January 2018: $282,100

Change from One Year Previous: +4.7%

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Click here for historical prices and a chart.

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From today's report:

"...Existing-home sales slumped for the second consecutive month in January and experienced their largest decline on an annual basis in over three years, according to the National Association of Realtors®. All major regions saw monthly and annual sales declines last month.

...Lawrence Yun, NAR chief economist, says January’s retreat in closings highlights the housing market’s glaring inventory shortage to start 2018. 'The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month,' he said. '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 calm the speedy price growth.'

...'Another month of solid price gains underlines this ongoing trend of strong demand and weak supply. 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,' said 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.'

First-time buyers were 29 percent of sales in January, which is down from 32 percent in December 2017 and 33 percent a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 2017 – revealed that the annual share of first-time buyers was 34 percent.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage moved higher for the fourth straight month to 4.03 percent in January from 3.95 percent in December. The average commitment rate for all of 2017 was 3.99 percent.

'The gradual uptick in wages over the last few months is a promising development for the housing market, but there’s risk these income gains could be offset by the recent jump in mortgage rates,' said Yun. 'That is why the pace of added new and existing supply in the months ahead is worth monitoring. If inventory conditions can improve enough to cool the swift price growth in several markets, most prospective buyers should be able to absorb the higher borrowing costs.'

Properties typically stayed on the market for 42 days in January, which is up from 40 days in December 2017 but down from a year ago (50 days). Forty-three percent of homes sold in January were on the market for less than a month.

...NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says Realtors® in several markets are reporting that the spring buying season appears to be starting early this year. 'Those planning to buy a home this spring should look into getting pre-approved for a mortgage now and start having those serious conversations with their real estate agent on what they’re looking for in a home and where they want to buy,' she said. 'With demand exceeding supply in most areas, competition will only heat up in the months ahead. Beginning the home search now could lead to a successful and less stressful buying experience.'

All-cash sales were 22 percent of transactions in January, which is up from 20 percent in December 2017 but down from 23 percent a year ago. Individual investors, who account for many cash sales, purchased 17 percent of homes in January, up from 16 percent both last month and a year ago.

Distressed sales – foreclosures and short sales – were 5 percent of sales in January, unchanged from December 2017 and down from 7 percent a year ago. Four percent of January sales were foreclosures and 1 percent were short sales..."