US existing home sales began 2017 strongly, index figures show

Existing home sales in the United States began the year strongly, increasing to their fastest pace in January for almost a decade, the latest index shows.

Prices increased by 7.1% in the 12 months to January 2017 to a median of $228,900, the fastest price rise since January 2016 and it was the 59th month in a row of year on year gains.

Completed transactions that include single family homes, town homes, condominiums and co-ops increased by 3.3% to a seasonally adjusted annual rate of 5.69 million in January from an upwardly revised 5.51 million in December 2016.

The data from the National Association of Realtors also shows that January’s sales pace is 3.8% higher than a year ago and surpasses November 2016 as the strongest since February 2007.

A breakdown of the figures show that sales increased by 5.3% in January in the Northeast and are now 6.7% above a year ago. The median price in the Northeast was $253,800, which is 2.5% above January 2016.

In the Midwest existing home sales fell by 1.5% and are 0.8% below a year ago. The median price in the Midwest was $174,900, up 6.5% from January 2016.

Sales in the South increased by 3.6% in January and are now 3.1% above a year ago. The median price in the South was $201,400, up 9.2% from a year ago.

Existing home sales in the West were up 6.6% and are now 8.4% above a year ago. The median price in the West was $332,300, up 6.8% from January 2016.

According to Lawrence Yun, NAR chief economist, 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,’ he said.

‘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,’ he added.

The data also shows that total housing inventory at the end of January rose 2.4% to 1.69 million existing homes available for sale, but it is still 7.1% lower than a year ago and has fallen year on year for 20 consecutive months. Unsold inventory is at a 3.6 month supply at the current sales pace, unchanged from December 2016.

Properties typically stayed on the market for 50 days in January, down from 52 days in December and the 64 days recorded a year ago. Short sales were on the market the longest at a median of 108 days in January, while foreclosures sold in 51 days and non-distressed homes took 49 days and 38% of homes sold in January were on the market for less than a month.

‘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,’ Yun pointed out.

Some 33% of sales were to first time buyers, a rise of 32% compared with December 2016 and a year ago. Overall the whole of 2016 some 35% of homes were sold to first time buyers.

All-cash sales were 23% of the market in January, up from 21% in December but down from 26% a year ago. Individual investors, who account for many cash sales, purchased 15% of homes in January, unchanged from December and down from 17% a year ago while 59% of investors paid in cash in January.