The Scotsman Guide - Victor Whitman - 22 February 2017
Home sales started the year at the fastest pace in nearly a decade despite fast-rising prices and low levels of inventories for sale.
Existing home sales were running at an annual pace of 5.69 million in January, the highest level since February 2007. Sales increased in all regions except the Midwest, and were up 3.3 percent from December and up 3.8 percent from the pace a year earlier, the National Association of Realtors (NAR) reported on Wednesday.
“Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” NAR’s Chief Economist Lawerence Yun said.
Yun noted that inventories are “far from adequate and deteriorating affordability conditions,” however.
NAR’s data suggests that most regions are experiencing a full-blown sellers markets, with prices rising and properties selling faster. On a nationwide basis, it took an average 50 days for a listing to sell, down two days from in December, but down two weeks from the pace in January 2016. In two of the nation’s most expensive markets, San Jose, California and San Francisco, homes were selling on average within 43 days and 47 days, respectively.
“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range,” Yun said.
The median price of homes in January was $228,900, up 7.1 percent from the price 12 months earlier. It was the 59th consecutive month of year-over-year gains, NAR said. Sales inventories ticked up slightly, but remain near all-time lows. NAR estimated that 1.69 million homes were for sale in January, up 2.4 percent from December. That was 7.1 percent lower than a year earlier, however.
The unsold inventory was at a 3.6-months supply, unchanged from December.
Housing economists are increasingly becoming alarmed at the combination of rising rates, low inventories and rising home prices.
The title company, First American, models market conditions to determine its potential for sales. In January, it lowered the annualized sales potential to 5.5 million units in January, down 1.9 percent.
“The low inventory of homes for sale, currently 3.6 months’ supply, continues to be a concern,” First American’s Chief EconomistMark Fleming said.
On a year-over-year basis, the annualized pace of sales were up 8.4 percent in the West; 6.7 percent in the Northeast; and 3.1 percent in the South, NAR reported. The annualized rate of sales fell 0.8 percent in the Midwest compared to the pace set in January 2016, NAR said.