Key Highlights
- 32% of all home sales made by first-time buyers
- National homeownership rate increased among people younger than 35 years
- Overall sales increased +9.6% y/y in January 2020 though declined -1.3% compared to December 2019
Low mortgage rates incentivized first-time buyers to purchase homes in January 2020, according to the National Association of REALTORS® (NAR). First-time buyers accounted for 32% of all home sales in January 2020, up from 29% one year ago. This increase of first-time buyers stepping up to the home buying plate builds upon last year’s increase in homeownership rates among those under-35 years (typically first-time buyers) from 35.4% in early 2019 to 37.6% in late 2019.
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NAR’s chief economist, Lawrence Yun, said, “It’s good to see first-time buyers slowly stepping into the markets. The rise in homeownership rate among younger adults under-35 and minority households means an increasing number of Americans can build wealth by owning real estate. Still,” Yun added, “in order to further extend opportunities, significantly more inventory and home construction are needed at the affordable price points.”
Overall, sales in January 2020 were down -1.3% on a month-to-month basis compared to December 2019, due primarily to a slip in sales in the Western region of the country. However, again according to NAR, home sales nationally gained +9.6% on a year-to-year basis.
Existing home prices hit a median of $266,300, an increase of +6.8% from a year ago. Take a regional look for both sales and prices:
- Midwest –
- Sales increased +2.4% to an annual rate of 1.29M, up from 8.4% in January 2019.
- Median existing home price of $200,000, +5.4% from January 2019
- South
- Sales increased +0.4% to an annual rate of 2.38M, up +11.7% from January 2019
- Median existing home price of $229,000, an increase of +6.3% from January 2019
- West
- Sales decreased -4.4% to an annualized rate of 10.6M but still an +8.2% increase from January 2019
- Median price of $393,800, an increase of +5.2% from January 2019
- Northeast
- Sales unchanged at an annualized rate of 730,000, an increase of +7.4% in January 2019
- Median existing home price of $312,100, an increase of +11.5% from January 2019
Inventory dropped -10.7% from one year ago to the lowest supply level since 1999, according to the US Commerce Department.
Housing starts decreased -3.6% in January 2020 BUT housing permits rose +9.2% to an annualized pace of 1.55M. Single-family permits increase +6.4% and multi-family permits increased to +14.6%. Lawrence Yun with NAR said, “…last month’s decline in housing starts is nothing to be concerned about…what is important is the trend line, which is clearly on an upswing. More construction will mean more housing inventory for consumers in the later months of the year.”
Thanks to realtor.com and CNBC’s Diana Olick for source data.
Also read: Flippers Flipping the Least for Lowest Prices in 8 Years, 4 Things for Homebuyers to Consider in 2020, Population Growth in the South and West Driving Up New Home Sales & Prices
