After hitting a near two-year high in December, existing home sales, as reported by the National Association of Realtors (NAR), dropped in January amid tight inventory and rising prices.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, fell 1.3% to a seasonally adjusted annual rate of 5.46 million in January. However, on a year-over-year basis, sales were 9.6% higher than a year ago.
The first-time buyer share slightly increased to 32% in January from 31% last month and 29% a year ago. The January inventory level rose to 1.42 million units from 1.39 million units in December but decreased from 1.59 million units a year ago.
This is the lowest inventory level for January since 1999. At the current sales rate, the January unsold inventory represents a 3.1-month supply, up from a 3.0-month supply last month but down from a 3.8 a year ago.
Homes stayed on the market for an average of 43 days in January, up from 41 days last month but down from 49 days a year ago. In January, 42% of homes sold were on the market for less than a month.
The January all-cash sales shared 21% of transactions, up from 20% last month but down from 23% a year ago.
The January median sales price of all existing homes was $266,300, up 6.8% from a year ago, representing the 95th consecutive month of year-over-year increases. The median existing condominium/co-op price of $248,100 in January was up 5.7% from a year ago.
Regionally, all regions saw a marginal increase or no changes in existing home sales in January except the West, compared to previous month. Sales in the Midwest and South grew 2.4% and 0.4%, while sales in the West declined 9.4% from last month. Sales in the Northeast remained unchanged. On a year-over-year basis, sales rose in all four major regions, ranging from 7.4% in the Northeast to 11.7% in the South.
Despite the monthly decline, 2020 home sales outlook remains promising, according to NAR. The upward trend for housing starts suggests the potential for future new home sales as well. Meanwhile, supported by low mortgage rates and solid job growth, builder confidence remains at near a two-decade high.
Though low mortgage rates help support affordability, limited housing supply continues to drive up home prices. As economic conditions are expected to remain favorable for homebuyers, more inventory is needed for further home building gains in 2020.