Low Inventory Drives National Home Prices Higher
The busy spring buying season is almost at hand; unfortunately, current supply levels are too low to meet demand. By the end of January, total housing inventory rose to 1.82 million existing homes available for sale, an increase of 3.4 percent. This is 2.2 percent lower than a year ago. At the current sales pace, it would take four months for today’s inventory to sell. With demand outstripping supply, it is a seller’s market. Prices are up considerably when compared to January 2015. The median existing-home price climbed to $213,800 in January. This is up 8.2 percent from a year ago and the largest increase seen since April 2015’s climb of 8.5 percent. For the 47th month in a row, prices have risen year over year.
Who Is Buying?
First-time buyers represented 32 percent of the market in January, which is steady from a month ago and up 28 percent from a year ago. For the entire year, first-time buyers accounted for 30 percent of all purchases, up from 29 percent for the previous two years. Meanwhile, 26 percent of January’s transactions were all-cash sales. Individual investors account for most cash sales; 67 percent of investors paid cash for their purchases in January. This group represented 17 percent of all purchasing activity̶the highest share since last January.
National Home Sales Are Up
Existing-home sales climbed to a seasonally adjusted annual rate of 5.47 million in January, up 11 percent from a year ago. Sales haven’t seen a year-over-year increase this impressive since July 2013. What’s more, sales reached their highest annual rate since July 2015. The global economy may be facing mounting pressures, but according to the National Association of Realtors’ chief economist Lawrence Yun, “the housing sector continues to recover and will likely help the US economy avoid a recession.”
Regional Home Sales
‣ Northeast – Existing-home sales’ annual rate: 760,000, a rise of 2.7 percent. Sales have risen 20.6 percent above a year ago. Median price: $247,500, which is 0.9 percent higher than January 2015.
‣ Midwest – Existing-home sales’ annual rate: 1.3 million, a 4 percent increase. Sales are 18.2 percent above a year ago. Median price: $164,300, an 8.7 percent climb from a year ago.
‣ South – Existing-home sales’ annual rate: 2.24 million, unchanged from December 2015. January sales are 5.7 percent higher than a year ago. Median price: $184,800, an 8.5 percent increase from January 2015.
‣ West – Existing-home sales’ annual rate: 1.17 million, a drop of 4.1 percent. Sales are still up 8.3 percent from a year ago. Median price: $309,400, which is 7.4 percent above a year ago.