Buyers looking for a home right now need to be ready to pounce. Inventory of homes is so low that, in January, homes sold in half the time they did a year ago.
Properties sold in January typically remained on the market for 21 days during the month, down from 43 days a year ago. Most homes, 71%, that sold in January were on the market for less than a month, according to the National Association of Realtors.
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As of the end of January, housing inventory fell to a record low of 1.04 million units, 26% less than last year, a record drop. At 1.9 months, the supply of unsold homes matched December as the lowest level since NAR began tracking single-family home supply in 1982.
Existing home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – continued to increase and were up 24% from one year ago, to a seasonally-adjusted annual rate of 6.69 million.
“Home sales continue to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market,” said Lawrence Yun, NAR’s chief economist. “Sales easily could have been even 20% higher if there had been more inventory and more choices.”
It is this lack of available inventory that is the key factor continuing to push prices higher, Yun said. The median sales price of existing homes rose to $303,900, 14% higher than one year ago when it was $266,300. Prices were up in all regions of the country and January’s national price increase marks 107 straight months of year-over-year gains.
The housing sector has been one of the few bright spots in a struggling economy, but prices continue to rise faster than incomes. Home prices in every US metro area that NAR tracks increased during the fourth quarter of 2020, according to a separate report from the group.
“Home sales are continuing to play a part in propping up the economy,” Yun said. “With additional stimulus likely to pass and several vaccines now available, the housing outlook looks solid for this year.”
Yun said he expects more jobs to return, which will spur home buying in the coming months. He predicts existing home sales will be strong in 2021, even as he says mortgage rates are likely to inch higher.
While home sales were very strong in all parts of the country, with growth up over 20% in all regions year over year, there was some month-to-month softening in the Northeast and the West, where prices are highest and increasing the most.
The South saw sales in January rise by 3.2% from December, and sales in the Midwest climbed 1.9%. Meanwhile, sales in the Northeast fell by 2.2% and, in the West, they dropped 4.4% during the same period.
January’s strong sales report is no surprise given high demand and low mortgage rates, said Robert Frick, corporate economist at Navy Federal Credit Union. The constraining factor continues to be supply.
“Though that should ease this spring with more homeowners willing to move given a combination of warmer weather and a dramatically lower number of Covid-19 cases,” Frick said. “Rising prices remain a big barrier to homeownership for many. While home building is accelerating, we can expect demand exceeding supply at least until next year.”
