Existing-Home Sales Drop 1.2 Percent In January

Existing-home sales experienced a minor drop for the third consecutive month in January, according to the National Association of Realtors^®. Of the four major U.S. regions, only the Northeast saw an uptick in sales activity last month.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.2 percent from December to a seasonally adjusted annual rate of 4.94 million in January. Sales are now down 8.5 percent from a year ago (5.40 million in January 2018).

Lawrence Yun, NAR's chief economist, says last month's home sales of 4.94 million were the lowest since November 2015, but that he does not expect the numbers to decline further going forward.

"Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low. Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months."

The median existing-home price² for all housing types in January was $247,500, up 2.8 percent from January 2018 ($240,800). January's price increase marks the 83^rd straight month of year-over-year gains.

Yun notes that this median home price growth is the slowest since February 2012, and is cautions that the figures do not yet tell the full story for the month of January. "Lower mortgage rates from December 2018 had little impact on January sales; however, the lower rates will inevitably lead to more home sales."

Total housing inventory³ at the end of January increased to 1.59 million, up from 1.53 million existing homes available for sale in December, and represents an increase from 1.52 million a year ago. Unsold inventory is at a 3.9-month supply at the current sales pace, up from 3.7 months in December and from 3.4 months in January 2018.

Properties remained on the market for an average of 49 days in January, up from 46 days in December and 42 days a year ago. Thirty-eight percent of homes sold in January were on the market for less than a month.

While total inventory grew (on a year-over-year basis) for the sixth straight month, Yun says the market is still suffering from an inventory shortage. "In particular, the lower end of the market is experiencing a greater shortage, and more home construction is needed," says Yun. "Taking steps to lower construction costs would be a tremendous help. Local zoning ordinances should also be reformed, while the housing permitting process must be expedited; these simple acts would immediately increase homeownership opportunities and boost local economies."

Realtor.com^®'s Market Hotness Index, measuring time-on-the-market data and listing views per property, revealed that the hottest metro areas in January were Midland, Texas; Chico, California; San Francisco-Oakland-Hayward, California; Fort Wayne, Indiana; and Colorado Springs, Colorado.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 4.46 percent in January from 4.64 percent in December. The average commitment rate for all of 2018 was 4.54 percent.

"Decelerated sales and the increases in inventory will work in favor of potential homebuyers, putting them in a better negotiating position heading into the spring months," said NAR President John Smaby, a second-generation Realtor® from Edina, Minnesota and broker at Edina Realty. "On top of that, low-interest rates will bring an additional $80 per month savings compared to the rates of just a few months ago."

First-time buyers were responsible for 29 percent of sales in January, down from last month (32 percent), but the same as a year ago. NAR's 2018 Profile of Home Buyers and Sellers – released in late 2018⁴ – revealed that the annual share of first-time buyers was 33 percent.  

All-cash sales accounted for 23 percent of transactions in January, up from December and a year ago (22 percent in both cases). Individual investors, who account for many cash sales, purchased 16 percent of homes in January, up from 15 percent in December, but down from a year ago (17 percent).

Distressed sales⁵ – foreclosures and short sales – represented 4 percent of sales in January, up from 2 percent last month and down from 5 percent a year ago. One percent of January sales were short sales.

Single-family and Condo/Co-op Sales

Single-family home sales sit at a seasonally adjusted annual rate of 4.37 million in January, down from 4.45 million in December and 8.4 percent below the 4.77 million sales pace from a year ago. The median existing single-family home price was $249,400 in January, up 3.1 percent from January 2018.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 570,000 units in January, up 3.6 percent from last month and down 9.5 percent from a year ago. The median existing condo price was $233,000 in January, which is up 0.1 percent from a year ago.

Regional Breakdown

January existing-home sales in the Northeast increased 2.9 percent to an annual rate of 700,000, 1.4 percent below a year ago. The median price in the Northeast was $270,000, which is up 0.4 percent from January 2018.

In the Midwest, existing-home sales fell 2.5 percent from last month to an annual rate of 1.16 million in January, down 7.9 percent overall from a year ago. The median price in the Midwest was $189,700, which is up 1.4 percent from last year.

Existing-home sales in the South dropped 1.0 percent to an annual rate of 2.08 million in January, down 8.4 percent from last year. The median price in the South was $214,800, up 2.5 percent from a year ago.

Existing-home sales in the West dipped 2.9 percent to an annual rate of 1.00 million in January, 13.8 percent below a year ago. The median price in the West was $374,600, up 2.9 percent from January 2018.

The National Association of Realtors^® is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

NOTE:  For local information, please contact the local association of Realtors^® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

¹Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
Every February a routine adjustment to seasonal adjustment factors is applied to monthly data spanning three past years. The raw monthly home sales (non-seasonally adjusted) and annual figures are not impacted. However, monthly seasonally adjusted annualized sales data are modestly changed (from 2016 to 2018) in order to better capture the seasonal patterns of recent past years.

²The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR's quarterly metro area price reports.

³Total inventory and month's supply data are available back through 1999, while single-family inventory and month's supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

⁴Survey results represent owner-occupants and differ from separately reported monthly findings from NAR's Realtors^®Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.

⁵Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR's Realtors^® Confidence Index, posted at nar.realtor.

NOTE: NAR's Pending Home Sales Index for January is scheduled for release on February 27, and Existing-Home Sales for February will be released March 22; release times are 10:00 a.m. ET.

Information about NAR is available at www.nar.realtor. This and other news releases are posted in the newsroom under the "About NAR" tab. Statistical data in this release, as well as other tables and surveys, are posted in the "Research and Statistics" tab.