Existing home sales rose slightly in January, but the record low supply outweighed the market

After a brief setback in December, homebuyers returned to the market, although they are still hampered by a record low supply.

According to the National Association of Realtors, sales of existing homes increased by 0.6% in January compared to December.

Sales ended the month with a seasonally adjusted rate of 6.69 million on an annual basis, which was 23.7% higher compared to January 2020. This is the second highest selling point since April 2006.

“Home sales continue to play a role in boosting the economy,” said Lawrence Yun, chief economist at the NAR. “With additional stimulus likely to succeed and several vaccines now available, the outlook for housing looks good for this year.”

There were 1.04 million homes at the end of January, down 26% from a year ago. At the current rate of sales, there is now an offer of 1.9 months, the lowest since the brokers started tracking this benchmark in 1982. One year ago, there was more than an offer of three months.

The lack of supply in the face of strong demand pushes prices ever higher. The average price of an existing home sold in January was $ 303,900, an increase of 14.1% from January 2020. This is the highest January price the realtors have ever recorded.

“We need to build more houses,” Yun said. “Although homes are starting to decline, it is interesting that the housing permits, the desire to build homes, remain the highest in more than a decade.”

On the very low end of the market, activity was the slowest, with home sales falling below $ 100,000 a year below $ 100,000 and sales of million-dollar homes up 77%.

Days on the market stay very fast, and homes sell on average within 21 days. Last year in January, homes were sold on average within 43 days.

Mortgage rates were near record lows in December, when most contracts would have been signed on these sales. This gave buyers extra purchasing power, especially given sky-high house prices. Over the past week, however, the mortgage rate has moved sharply higher.

Looking ahead, we expect demand to remain strong thanks to a large and ever-growing group of buyers reaching prime prime age, but rising prices and mortgage rates – which have risen this week – could dampen buyers’ enthusiasm as the monthly costs are rising, “said Danielle Hale, chief economist at realtor.com.

Sales of newly built homes, which are measured by signed contracts and do not close, rose by 15% in November, which was the last reading. New homebuilders are taking advantage of the severe shortage of existing homes for sale, but they are struggling to keep up with demand due to the recent rise in timber prices. They also see shortages of completed plots and skilled labor.