January Home Sales Reach Highest Level in a Decade, Realtors Say
February 24, 2017
Supply of existing homes remains historically low
“Buyers are in force in 2017,” said Nela Richardson, chief economist at online property brokerage Redfin Corp. Ms. Richardson said the firm is seeing the highest demand for homes—as measured by the number of tours buyers are taking and offers they are writing—since January 2013. Inventory rose 2.4% at the end of January from the end of December, when supply hit the lowest level since the Realtors association began tracking all types of supply in 1999. Still, inventory still was down 7.1% from a year earlier, which is a more reliable measure because December is historically a slow time for buyers to put homes on the market. At the current sales pace, it would take 3.6 months to exhaust the supply of existing homes on the market, the Realtors said Wednesday. A lack of available properties could put a brake on purchases despite low unemployment and rising incomes supporting demand for homes. “There is tremendous resilience among consumers of wanting to buy a home, but we just don’t have homes for a sale,” Realtors economist Lawrence Yun said. Low inventory is also helping to push up prices. The median sale price rose 7.1% in January from a year earlier, to $228,900. That, combined with higher mortgage rates, made affordability more of a challenge for home buyers last month. Rising mortgage rates are also putting pressure on affordability. Rates for a 30-year mortgage held at 4.15% last week, down slightly from a week earlier but up from about 3.5% before the election, according to mortgage company Freddie Mac. David Berson, chief economist at Nationwide Insurance, said home-price gains of 3% to 4% is considered sustainable. The current rate of price appreciation “is ultimately not a positive thing because it keeps first-time buyers out of the market,” he said. Low inventory is likely to continue to be a challenge throughout the year. U.S. housing starts dropped 2.6% in January to a seasonally adjusted rate of 1.246 million, below the revised December rate of 1.279 million, the Commerce Department said Thursday. News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors. “Overall, this is an exceptionally strong way to start the year, and it’s clear that demand is likely to continue to be very high as the market enters the spring, even if inventory remains low and affordability suffers somewhat from rising mortgage interest rates,” said Svenja Gudell, chief economist at Zillow.