US existing home sales remain strong despite January dip

Home sales were not just lower in Canada last month; there was a 1.3% decline in US existing home sales month-after-month.

The National Association of Realtors reports that on an annual basis sales were up 9.6% to a seasonally-adjusted annual rate of 5.46 million and chief economist Lawrence Yun says the outlook remains positive.

“The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales,” he said.

The monthly decline was driven by a significant drop in existing sales in the West (down 9.4%) while the Northeast was flat, the South gained 0.4%, and the Midwest was up 2.4%. All regions gained year-over-year ranging from 11.7% in the South to 7.4% in the Northeast.

All regions saw an increase in their median existing home price, driving the national median to $266,300, up 6.8% year-over-year. Inventory totaled 1.42 million units, up 2.2% from December, but down 10.7% from one year ago, and was the lowest in more than 20 years.

“Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” Yun said.

First time buyers

There was an increase in the share of existing homes that were sold to first-time buyers at 32% compared to 31% in December and 29% in January 2019.

“It is good to see first-time buyers slowly stepping into the market,” Yun said. “The rise in the homeownership rate among the younger adults, under 35, and minority households means an increasing number of Americans can build wealth by owning real estate. Still, in order to further expand opportunities, significantly more inventory and home construction are needed at the affordable price points.”