Saturday, 23 February, 2019

Existing-Home Sales Fell 3.2% in January on Tight Inventory

Existing-Home Sales Fell 3.2% in January on Tight Inventory Existing-Home Sales Fell 3.2% in January on Tight Inventory
Nellie Chapman | 22 February, 2018, 03:29

"The price appreciation has been very good, but the future rent growth may not be as bright as what it had been, so if the investors begin to unload, there will be a welcoming trend for the housing market now, as we need more inventory", said Lawrence Yun, chief economist for the National Association of Realtors.

The National Association of Realtors said January's drop was the largest year-over-year decline for the US sales of existing homes since 2014.

The median sales price was $240,500 in January, off from $246,500 in December, but up 5.8% from a year ago. January marked the 71st straight month of year-over-year gains. That was the biggest year-on-year drop since August 2014.

As has been the case for more than a year now, the main culprit is lack of supply.

The median seasonally adjusted price of existing homes sold in January surged to a new all-time record, increasing by 1.8 percent to $255,500, up 5.7 percent year-over-year.

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

A report from the Mortgage Bankers Association on Wednesday showed applications for loans to buy a home decreased more than 6 percent last week from a week earlier.

Distressed sales were 5% of the total, unchanged from last month and down 2% from a year ago.

First-time buyers represented 29 percent of sales in January, which is down from 32 percent in December 2017. "While the good news is that Realtors in most areas are saying buyer traffic is even stronger than the beginning of a year ago, sales failed to follow course and far lagged last January's pace". While that is still a historically low rate, for many homeowners it is much higher than their current mortgage rate.

Home sales are on the rise in Yuma county, contradicting the national dip that the real estate industry is experiencing according to The Yuma Association of Realtors.

Economists expect supply to remain tight this year, which together with rising mortgage rates could result in modest home sales growth in 2018.

The PHLX housing index was trading higher, in line with a broadly firmer USA stock market. There are also worries that caps on the deduction for mortgage interest following a recent overhaul of the tax code could hurt demand for houses.

Unfortunately, the entry-level price point is not where most new home builders exist either today, given the significantly higher costs of construction. Single-family home completions were the highest since June 2008.

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.

In January, houses typically stayed on the market for 42 days, up from 40 days in December and down from 50 days a year ago.