Sales of existing homes jumped +6.7% m/m in January 2022
Existing Home Sales Bumped Up +6.7% m/m from December to January
Existing home sales surprisingly jumped +6.7% m/m to a seasonally adjusted annualized rate of 6.5M in January 2022, according to the National Association of REALTORS® (NAR).
Even with this +6.7% m/m increase in existing home sales, existing sales volume was -2.3% less comparatively with January 2021.
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Why was this month-to-month increase in existing home sales surprising? Because the number of homes for sale in January plunged to a record low at -16.5% y/y.
Inventory of Existing For-Sale Homes Sank to New Record Low in January
The supply of for-sale homes in January plummeted to a new record low of -16.5% y/y. That -16.5% translates into only 860,000 homes being available to buyers. NAR indicated that at January’s sales pace, it would take only 1.6 months to sell that inventory, also a new record low. (A 4 to 6-month supply of for-sale homes is considered to be a “balanced” market for both sellers and buyers.)
Lawrence Yun, chief economist with NAR, said, “Seller traffic is very, very low, implying that inventory is struggling to make the turn. Realtors are indicating multiple bidding wars are still happening.”
January’s Median Price of Existing Homes Jumped +15.4% y/y
Tight supply and unabated strong demand brought the median sale price of an existing home to $350,300 in January 2022, a whopping increase of +15.4% y/y.
With for-sale supply being most limited on the low-end of the market, this median sale price increase of +15.6% indicates that January’s home sale activity occurred amid the higher end of the market. Based on price tiers, January home sales looked like this:
– $100,000 – $250,000 – sales down -23%
– $750,000 – $1M – sales up +33%
– $1M+ – sales up +39%
Sales of New Homes Jumped Nearly +12% m/m from November to December
Based on the number of contracts signed rather than on closings, new home sales soared nearly +12% m/m from November to December 2021.
Buyers increasingly shifted their eyes to newly built homes due to severe shortages of for-sale existing homes. The inventory problem with new for-sale homes is that builders are simply not keeping up with demand because of supply chain and labor shortages.
Characteristics of Existing Home Sales in January 2022
January’s existing home sale numbers were predicated on contracts signed in November and December 2021 BEFORE mortgage interest rates began to rise. During November-December, the average rate on a 30-year fixed rate loan came in at approximately 3.2%. Today, the rate on a 30-year fixed rate loan stands at a bit more than 4%, according to Mortgage Daily News.
The pace of sales came to an average of 19 days in January. In January 2021, the pace of sales was also fast at 21 days.
Cash sales in January 2022 jumped to 27% from 19% one year ago.
The investor share of the market jumped to +22% from 15% one year ago.
Impact of Rising Mortgage Loans?
Delving into the question of how rising mortgage rates may impact the for-sale market going forward from January 2022, Danielle Hale, chief economist with Realtor.com, said, “The major question is whether rising rates will quench housing demand that stems, in large part, from a demographic tidal wave of young households at key homebuying ages.
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“Our expectation is that we’ll continue to see home sales at a relatively high level throughout 2022, as post-pandemic shifts like rising workplace flexibility enable would-be buyers to expand their geographic search horizons and find an affordable place to call home.”
Thanks to CNBC.
