Economic Buzz: US Existing Home Sales Fall More Than 3% In January

Sales of US homes fall year over year by most in 3

Sales of previously owned US homes unexpectedly fell in January to a four-month low, indicating a shortage of available properties is increasingly hindering the real-estate industry, a National Association of Realtors report showed Wednesday.

Compared with a year earlier, sales in January were down 4.8%, the steepest annual decline since August 2014.

Existing home sales fell 3.2% to a seasonally adjusted 5.38 million-unitrate in January from a revised 5.56 million sales pace the previous month, first reported as 5.57 million, the National Association of Realtors announced Wednesday.

The Realtors said that unsold inventory - the supply of available homes - would sell out in only 3.4 months, based on the current pace of purchasing.

Yun said January saw a jump in new home construction, and growing homebuilder confidence.

"Another month of solid price gains underlines this ongoing trend of strong demand and weak supply", Yun said. Economists often describe a "balanced" market as one with five to seven months worth of inventory. "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.

Sales of US homes fall year over year by most in 3

But Ian Shepherdson of Pantheon Macroeconomics said rising mortgage rates did not explain January's slump in sales, given that sales generally lag changes in interest rates.

First-time buyers made up just 29% of all buyers, down from 32% in December and 33% in January 2017. Four percent of January sales were foreclosures and 1 percent were short sales.

January's sales stem from contracts that were signed in November or December, so they don't reflect the sharp jump in mortgage rates since the beginning of the year. "With demand exceeding supply in most areas, competition will only heat up in the months ahead".

Properties sold in January typically stayed on the market for 42 days, down from 50 days a year ago. The median existing condo price was $231,600 in January, which is 7.1 percent above a year ago.

Inventory eased, increasing 2.3 percent from December to 1.72 million units (SAAR) but remained down 9.5 percent from a year ago.

"However, while the yearly growth rate in potential sales is now at 3.6 percent, it is expected to slow to just below 1 percent by the end of 2019", he adds. Regionally, the month-over-month price increase was strongest in the Midwest (up 4.1 percent) and slowest in the West (up 0.8 percent).

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