Existing Home Sales Rise More Than Forecast as Supply Drops
Sales of previously owned homes climbed for the fifth time in six months to the highest level since 2007, indicating housing-market momentum will extend into 2017, National Association of Realtors data showed Wednesday.
Contract closings rose 3.3% to a 5.69 million annual rate in January (the forecast was 5.55 million), the highest level since February 2007. The median sales price jumped 7.1% from a year earlier to $228,900, the fastest gain since January 2016. The inventory of available properties fell 7.1% from January 2016 to 1.69 million.
Housing demand remained strong in January despite dwindling inventories of available homes. While a solid job market and rising wages continue to support gains in the industry, supplies could remain limited by a shrinking number of distressed properties as well as strength in the rental market. A post-election jump in mortgage rates, led by optimism about President Donald Trump's plans to ease regulations and spur economic growth, could also impact housing demand in 2017.
"Rates have risen, but despite that, there is tremendous resilience from consumers wanting to buy a home," Lawrence Yun, chief economist at the Realtors group in Washington, told reporters as the data were released. "The problem remains that there is very little inventory."
NAR projects sales in 2017 will increase 1.7% from last year. January sales rose in three of four regions, including a 6.6% increase in the West and a 3.6% gain in the South. At the current pace, it would take 3.6 months to sell the houses on the market, unchanged from December The Realtors group considers less than a five-month supply as consistent with a tight market.
Single-family home sales increased 2.6% to an annual rate of 5.04 million. Purchases of condominium and co-op units rose 8.3% to a 650,000 pace.
First-time buyers accounted for 33% of all sales, compared with 32% in the prior month. Homes sold in 50 days in January, compared with 52 days in December and 64 days a year earlier. Of the homes sold in January, 38% were on the market for less than a month.