Existing home sales in the United States rose to their highest level since 2007, according to a report from the National Association of Realtors. The rate increase helped push all regions, minus the Midwest, to experience sales gains in January.
Economists forecasted sales of existing homes to increase by 1.1% in January, increasing to an annual rate of 5.55 million. Sales figures for existing homes increased by 3.3% on the month, far exceeding expectations. The annual rate of sales rose to 5.69 million.
December sales figures were revised up by the association to 5.51 million.
November sales were the strongest since February 2007 when sales reached 5.60 million. January 2016 home sales were 5.48 million. Last month’s figures are 3.8% higher than the previous year.
Home prices are on the rise, up due to a shortfall in inventory. Housing market data remains volatile, with drastic changes month-to-month and constant revisions.
Existing home sale inventory fell for the 20th straight month in January to reach a 3.6 month supply. Home prices increased as a result of inventory falling to a median home sale price of $228,900, up 7.1% on the month. Median home prices are up for the 59th straight month.
Median home sale prices were $213,700 in January 2016.
The housing market is bracing for rising interest rates. High interest rates may lead to an adverse trend in the market, causing homeowners to remain reluctant to sell homes so that they can maintain lower interest rates. Home builder confidence is on the rise since November, which may boost falling home inventory.
Donald Trump’s administration aims to reduce regulations, which may help prospective homebuyers get mortgages with less red tape in the way.
Total housing inventory is up 2.4% in January to 1.69 million existing homes for sale. Existing home inventory a year prior was 1.82 million. Unsold inventory remains at a 3.6 level for the second month straight.
Older home sales are being hit with harsh safety standards. Questar Gas shut off a woman’s heat after an old water heater was emitting too much carbon monoxide. The technician also found that the woman’s furnace vents were shared with her neighbor, which is a further violation of safety laws. Furnace filters in older homes may not meet current emission standards.
Homes remained on the market for an average of 50 days in January, a two-day decrease from a month prior. Foreclosures remained on the market for an average of 51 days. January’s home sales saw 38% of homes remain on the market for less than 30 days.
The National Association of Realtors expects competition to increase in the Spring when home buyers look for low- and mid-market home prices.
William E. Brown, NAR President, states, “Supply and demand imbalances continue to be burdensome in many markets, and now Fannie Mae is supporting a Wall Street firm’s investment in single-family rentals.”
All-cash sales in January rose to 23% of all transactions. A year prior, all-cash sales accounted for 26% of all home sales. Individual investors account for the majority of all-cash sales, with 15% of homes sold in January sold to individual investors.
Single family home sales rose 2.6%, seasonally adjusted, on the month to an annual rate of 5.04 million. Midwest existing home sales decreased 1.5 to a 1.29 million annual rate in January.