Existing Home Sales Surge to a 5-Month High Amid Market Shifts
As the real estate market rebounds from a December low, existing home sales have climbed to a new 5-month peak, the National Association of Realtors (NAR) reports. This rise is fueled by low resale inventory paired with unwavering demand, propelling median sales prices upwards for the seventh consecutive month. Notably, this period marks the first instance in over a year where home price growth has surpassed wage increases, a significant shift in the market’s dynamics.
January witnessed a 3.1% increase in total existing home sales, which encompasses single-family homes, townhomes, condominiums, and co-ops, reaching a seasonally adjusted annual rate of 4.00 million. Despite this uptick, sales are still trailing 1.7% behind last year’s figures.
The landscape for first-time buyers is becoming increasingly challenging, with their market share dipping to 28% from the previous month and year. Conversely, inventory levels experienced a slight rise from December, offering a modest boost to housing availability. Nonetheless, the market remains tight, with January’s unsold inventory presenting a mere 3.0-months’ supply, indicating a persistent need for new home construction to achieve market balance.
The duration homes spend on the market has extended slightly, with properties now averaging 36 days before selling. Meanwhile, all-cash transactions have reached a decade high, accounting for 32% of January’s sales, highlighting how all-cash buyers remain insulated from fluctuating interest rates.
Median sales prices continue to ascend, with the January figure for all existing homes hitting a record $379,100, a 5.1% increase from the previous year. The condominium and co-op sector also saw a significant price jump, reinforcing the ongoing strength in property values.
Regionally, existing home sales experienced mixed results. The Midwest, South, and West saw sales increase, while the Northeast’s sales remained stagnant. The West, in particular, demonstrated resilience with a 2.8% year-over-year sales improvement, contrasting with declines in other regions.
Furthermore, the Pending Home Sales Index, a predictive metric of future sales based on contract signings, indicates a continued upward trajectory, reaching its highest level since August 2023 and marking a slight year-over-year increase. This suggests potential for sustained market activity in the forthcoming months.
Overall, while the real estate market faces challenges such as affordability and tight inventory, there are signs of improvement and increased activity. Buyers and sellers alike should remain vigilant, as the market’s trajectory continues to evolve amidst changing economic conditions.
