Monday, September 20, 2021
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Existing home sales rise more than forecast as supply drops

🕐 2 min read

Sales of previously owned U.S. homes climbed for the fifth time in six months to the highest level since 2007, indicating housing-market momentum will extend into 2017, National Association of Realtors data showed Wednesday.

Key points:

– Contract closings rose 3.3 percent to a 5.69 million annual rate in January (forecast was 5.55 million), the highest level since February 2007.

– Median sales price jumped 7.1 percent from a year earlier to $228,900, the fastest gain since January 2016.

– Inventory of available properties fell 7.1 percent from January 2016 to 1.69 million, making it the 20th consecutive year-over-year decline.

Big picture:

Housing demand remained strong in January despite dwindling inventories of available homes. While a solid job market and rising wages continue to support gains in the industry, supplies could remain limited by a shrinking number of distressed properties as well as strength in the rental market. A post-election jump in mortgage rates, led by optimism about President Donald Trump’s plans to ease regulations and spur economic growth, could also impact housing demand in 2017.

Economist takeaways:

“Rates have risen, but despite that, there is tremendous resilience from consumers wanting to buy a home,” Lawrence Yun, chief economist at the Realtors group in Washington, told reporters as the data were released. “The problem remains that there is very little inventory.”

The details:

– NAR projects sales in 2017 will increase 1.7 percent from last year.

– January sales rose in three of four regions, including a 6.6 percent increase in the West and a 3.6 percent gain in the South.

– At the current pace, it would take 3.6 months to sell the houses on the market, unchanged from December; Realtors group considers less than a five months’ supply as consistent with a tight market.

– Single-family home sales increased 2.6 percent to an annual rate of 5.04 million.

– Purchases of condominium and co-op units rose 8.3 percent to a 650,000 pace.

– First-time buyers accounted for 33 percent of all sales, compared with 32 percent in the prior month.

– Homes sold in 50 days in January, compared with 52 days in December and 64 days a year earlier.

– Of homes sold in January, 38 percent were on market for less than a month.

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