After a brief withdrawal in December, home buyers returned to the market, although they are still hampered by low supply.
Closed sales of existing homes rose January in 0.6% compared to December, according to the National Association of Realtors.
Sales ended the month at a quarterly adjusted annual rate of 6.69 million units, which was 23.7% higher compared to January 2020. This is the second highest selling rate since April 2006.
“Home sales continue to play a role in stimulating the economy,” said Lawrence Yun, chief economist for the NAR. “With more incentives likely to pass and several vaccines are now available, the housing outlook looks tough for this year.”
There were 1.04 million homes for sale at the end of January, down 26% from a year ago. At the current sales pace, there is now a 1.9-month supply, the lowest level since Realtors began monitoring this metric in 1982. One year ago there was more than 3-month supply there.
The lack of supply in line with strong demand continues to push prices higher and higher. The median price of a home sold in January was $ 303,900, an increase of 14.1% from January 2020. That is the highest price in January that Realtors have ever recorded.
“We need to build more homes,” Yun said. “While housing is beginning to decline, it is interesting that housing permits, the desire to build homes, remain at their highest level in more than a decade.”
Slower activity was at the very low end of the market, with home sales below $ 100,000 down 28% year-over-year, and million-dollar home sales up 77%.
Days on the market are still very fast, with homes selling on average in 21 days. Last January, homes sold in an average of 43 days.
Mortgage rates were close to low in December, when most of the contracts on these sales would be signed. That gave buyers more purchasing power, especially since home prices were high in the air. In the past week, however, mortgage rates have moved significantly higher.
“Looking ahead, we expect strong demand to remain thanks to a large and growing group of buyers reaching advanced buying ages, but rising prices and mortgage rates could jump this week – reducing customer engagement as monthly costs go up, “said Danielle Hale, chief economist at realtor.com.
Sales of new homes, measured by non-closing signed contracts, rose 15% year-over-year in November, which was the latest reading. New homebuilders are benefiting from the shortage of existing homes for sale, but are struggling to keep up with demand due to a recent spike in timber prices. They are also seeing a shortage of finished lots and skilled labor.