Home Sales Hit 10-Year High Despite Price, Inventory Problems
Sales last month – encompassing single-family houses as well as condos, town homes and co-ops – jumped 3.3 percent over the month to a seasonally adjusted annual rate of nearly 5.7 million. That’s the highest level the economy has seen since February 2007 and is up a healthy 3.8 percent over the year.
“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,” Lawrence Yun, the association’s chief economist, said in a statement Wednesday.
January’s sales broadly exceeded the expectations of analysts, many of whom expected a slight pullback after strong real estate performance in November and December. Samuel Coffin, an economist at UBS Investment Bank, described housing transactions in the fourth quarter of 2016 as having exhibited “exaggerated strength” that was unlikely to be sustained in January.
But sound economic fundamentals – such as low unemployment, rising wages and consistent job gains – and unseasonably warm weather, particularly in the Northeast, are believed to have helped bolster the housing market’s momentum last month.
“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,” Yun said.
Indeed, housing activity throughout the U.S. has been plagued by an inventory shortage that has driven up prices and is believed to have priced certain lower-income homebuyers out of the market. The National Association of Realtors estimated housing inventory ticked up slightly last month but was ultimately down 7.1 percent from the number of available homes on the market a year ago.
The group also said available properties that sold in January only stayed on the market for about 50 days, down from 52 for those sold in December and from the 64 days the median existing home was on the market in January 2016.
And with limited options and a competitive sales environment, prices have soared. The association estimates the median sale price for an existing home last month clocked in at $228,900, up 7.1 percent over the year.
“While strong price gains are positive for owners of homes and help to reduce the number of homeowners who owe more on their mortgage than the market value of their home, it is negative for affordability,” David Berson, senior vice president and chief economist at Nationwide Mutual Insurance Co., wrote in a research note Wednesday. “We have concerns that continued supply constraints in the housing market will allow outsized house price gains again in 2017, especially hurting potential first-time homebuyers.”
Source: usnews.com
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