Sales of existing homes increased in January, gaining 4.3%, to a seasonally adjusted annualized rate of 4.57 million homes. That compared with a downwardly revised estimated total of 4.38 million homes sold (also on an annualized basis) in December. This was the third rise in this closely tracked metric in the past four months. The increase, moreover, was just shy of consensus expectations, which had this series gaining from an initially estimated December pace of 4.61 million homes to 4.65 million units. The December number, as noted, was revised lower.
This data was provided by the National Association of Realtors (NAR), a real estate trade group. Meanwhile, inventories, a key figure in this series, continued to backtrack, suggesting that the once-formidable housing overhang is starting to retreat. Many believe that this key sector will not recover meaningfully until the number of homes on the market finally retreats notably. In all, inventories eased by 0.4% last month, falling to a supply of 2.31 million homes. That is a 6.1 month supply, a level that is considered to be fairly healthy. Overall, the inventory level would seem in reasonable balance at this time, favoring neither the buyers or the sellers. That would appear to be another sign of a healthier housing market.
Meantime, Lawrence Yun, the chief economist for the NAR said that “strong gains in contract activity in recent months show buyers are responding to very favorable market conditions. The uptrend in home sales is in line with all of the underlying fundamentals--pent-up housing formation, record low mortgage interest rates, bargain home prices, sustained job creation, and rising rents.”
Also, foreclosure sales are moving briskly, with a ready supply of home buyers and investors competing in nearly all markets. Also, inventories are off almost 21% in the past year, further suggesting that the housing market has likely past its multi-year low, and is poised to make a slow and uneven recovery. Increased buying power would seem likely to further propel this market forward in the months to come. All told, it was a reasonably good report, albeit not an eye opener, given the downward revision for December.
At the time of this report's issuance, the author did not have positions in any of the companies mentioned.