The headlines for existing home sales smartly improved saying “January’s sales gain signals resilience among consumers even in a rising interest rate environment”. Our analysis of the unadjusted data agrees.
Analyst Opinion of Existing Home Sales
This was a surprisingly good month for home sales. Based on pending home sales, this should have been a very poor month.
Econintersect Analysis
- Unadjusted sales rate of growth accelerated 5.7 % month-over-month, up 6.0 % year-over-year – sales growth rate trend accelerated using the 3 month moving average.
- Unadjusted price rate of growth accelerated 1.9 % month-over-month, up 5.2 % year-over-year – price growth rate trend accelerated using the 3 month moving average.
- The homes for sale inventory marginally grew this month, remains historically low for Januarys, and is down 7.1 % from inventory levels one year ago).
NAR reported:
- Sales up 3.3 % month-over-month, up 3.8 % year-over-year.
- Prices up 7.1 % year-over-year
- The market expected annualized sales volumes of 5.450 M to 5.630 M (consensus 5.575 million) vs the 5.69 million reported.
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The graph below presents unadjusted home sales volumes.
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Here are the headline words from the NAR analysts:
Lawrence Yun, NAR chief economist, says January’s sales gain signals resilience among consumers even in a rising interest rate environment. Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home. Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate and deteriorating affordability conditions.
Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range. NAR and realtor.com®’s new ongoing research — the Realtors® Affordability Distribution Curve and Score — revealed that the combination of higher rates and prices led to households in over half of all states last month being able to afford less of all active inventory on the market based on their income.”
NAR President William E. Brown cautions about another source that could possibly drag down inventory for would-be buyers in coming months. Supply and demand imbalances continue to be burdensome in many markets, and now Fannie Mae is supporting a Wall Street firm’s investment in single-family rentals,” he said. “This will only further hamper tight supply and put major investors in direct competition with traditional buyers. Instead, the GSEs should lower overly burdensome fees(link is external) and help qualified borrowers become homeowners.”
