National Association of Realtors
21 February 2018
Existing-home sales slumped for the second consecutive month in January and experienced their largest decline on an annual basis in over three years, according to the National Association of Realtors®. All major regions saw monthly and annual sales declines last month.
Total existing-home sales1, https://www.nar.realtor/existing-home-sales , which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, sank 3.2 percent in January to a seasonally adjusted annual rate of 5.38 million from a downwardly revised 5.56 million in December 2017. After last month’s decline, sales are 4.8 percent below a year ago (largest annual decline since August 2014 at 5.5 percent) and at their slowest pace since last September (5.37 million).
Lawrence Yun, NAR chief economist, says January’s retreat in closings highlights the housing market’s glaring inventory shortage to start 2018. “The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month,” he said. “While the good news is that Realtors® in most areas are saying buyer traffic is even stronger than the beginning of last year2, sales failed to follow course and far lagged last January’s pace. It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”
The median existing-home price3 for all housing types in January was $240,500, up 5.8 percent from January 2017 ($227,300). January’s price increase marks the 71ststraight month of year-over-year gains.
Total housing inventory4 at the end of January rose 4.1 percent to 1.52 million existing homes available for sale, but is still 9.5 percent lower than a year ago (1.68 million) and has fallen year-over-year for 32 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace (3.6 months a year ago).
“Another month of solid price gains underlines this ongoing trend of strong demand and weak supply. The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability,” said Yun. “However, there’s hope that the tide is finally turning. There was a nice jump in new home construction in January and homebuilder confidence is high. These two factors will hopefully lay the foundation for the building industry to meaningfully ramp up production as this year progresses.”
First-time buyers were 29 percent of sales in January, which is down from 32 percent in December 2017 and 33 percent a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20175 – revealed that the annual share of first-time buyers was 34 percent.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage moved higher for the fourth straight month to 4.03 percent in January from 3.95 percent in December. The average commitment rate for all of 2017 was 3.99 percent.
“The gradual uptick in wages over the last few months is a promising development for the housing market, but there’s risk these income gains could be offset by the recent jump in mortgage rates,” said Yun. “That is why the pace of added new and existing supply in the months ahead is worth monitoring. If inventory conditions can improve enough to cool the swift price growth in several markets, most prospective buyers should be able to absorb the higher borrowing costs.”
Properties typically stayed on the market for 42 days in January, which is up from 40 days in December 2017 but down from a year ago (50 days). Forty-three percent of homes sold in January were on the market for less than a month.
Realtor.com®’s Market Hotness Index , measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in January were San Francisco-Oakland-Hayward, Calif.; San Jose-Sunnyvale-Santa Clara, Calif.; Vallejo-Fairfield, Calif.; Midland, Texas; and Colorado Springs, Colo.
NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says Realtors® in several markets are reporting that the spring buying season appears to be starting early this year. “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. “With demand exceeding supply in most areas, competition will only heat up in the months ahead. Beginning the home search now could lead to a successful and less stressful buying experience.”
All-cash sales were 22 percent of transactions in January, which is up from 20 percent in December 2017 but down from 23 percent a year ago. Individual investors, who account for many cash sales, purchased 17 percent of homes in January, up from 16 percent both last month and a year ago.
Distressed sales6 – foreclosures and short sales – were 5 percent of sales in January, unchanged from December 2017 and down from 7 percent a year ago. Four percent of January sales were foreclosures and 1 percent were short sales.
Single-family home sales declined 3.8 percent to a seasonally adjusted annual rate of 4.76 million in January from 4.95 million in December, and are now 4.8 percent below the 5.00 million pace a year ago. The median existing single-family home price was $241,700 in January, up 5.7 percent from January 2017.
Existing condominium and co-op sales rose 1.6 percent to a seasonally adjusted annual rate of 620,000 units in January, but are still 4.6 percent below a year ago. The median existing condo price was $231,600 in January, which is 7.1 percent above a year ago.
January existing-home sales in the Northeast declined 1.4 percent to an annual rate of 730,000, and are now 7.6 percent below a year ago. The median price in the Northeast was $269,100, which is 6.8 percent above January 2017.
In the Midwest, existing-home sales dipped 6.0 percent to an annual rate of 1.25 million in January, and are now 3.8 percent below a year ago. The median price in the Midwest was $188,000, up 8.7 percent from a year ago.
Existing-home sales in the South decreased 1.3 percent to an annual rate of 2.26 million in January, and are 1.7 percent lower than a year ago. The median price in the South was $208,200, up 4.3 percent from a year ago.
Existing-home sales in the West fell 5.0 percent to an annual rate of 1.14 million in January, and are now 9.5 percent below a year ago. The median price in the West was $362,600, up 8.8 percent from January 2017.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.
1 Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2 According to NAR’s latest Realtors® Confidence Index , the Buyer Traffic Index came in at 69 in January, up from 63 in January 2017.
3 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
4 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
5 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.
6 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index , posted at nar.realtor.
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