Existing-home sales experienced a minor downturn for the third month in a row this January, according to the National Association of Realtors.
Overall existing-home sales, including single-family homes, townhomes, condominiums and co-ops, decreased by 1.2% from December to a seasonally adjusted annual rate of 4.94 million in January. Sales are currently down by 8.5% compared to last year’s (5.40 million in January 2018).
Last month’s sales pace was the lowest since November 2015, according to NAR chief economist Lawrence Yun. However, he predicted that the figures would not decline further going forward.
“Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low,” Yun said. “Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.”
The median existing-home price for all housing types was $247,500 last month, 2.8% higher than January 2018. The price increase marks the 83rd straight month of year-over-year gains.
Yun said that this median home price growth is the most sluggish since February 2012. He also warned that the numbers do not yet paint the whole picture for January.
“Lower mortgage rates from December 2018 had little impact on January sales. However, the lower rates will inevitably lead to more home sales,” said Yun.
January’s total housing inventory increased to 1.59 million from 1.53 million existing homes up for sale in December. The unsold inventory also grew from a 3.7-month supply in December to a 3.9-month supply at the current sales pace.
Properties are also remaining on the market longer, at an average of 49 days in January, up from 46 days in December. Thirty-eight percent of homes sold in January stayed on the market for less than a month. Yun said the market still suffers from inventory shortage.
“In particular, the lower end of the market is experiencing a greater shortage, and more home construction is needed,” said Yun. “Taking steps to lower construction costs would be a tremendous help. Local zoning ordinances should also be reformed, while the housing permitting process must be expedited; these simple acts would immediately increase homeownership opportunities and boost local economies.”
“Decelerated sales and the increases in inventory will work in favor of potential homebuyers, putting them in a better negotiating position heading into the spring months,” said NAR President John Smaby. “On top of that, low interest rates will bring an additional $80 per month savings compared to the rates of just a few months ago.”