KEY MARKET INDICATORS as of Feb 26, 2018
January Home Sales
Sales of both new and existing homes came under pressure in January. Rising interest rates was a factor in driving sales lower, and could bring more volatility in the coming months. In addition, housing market has entered a more mature phase, with growth in the first-time homebuyer market beginning to slow down and repeat buyers remaining on the sidelines. In this phase, growth will be harder to come by and low inventory could also make the market more volatile. Despite the lower sales in January, we continue to expect sales growth (mainly from new homes) and higher home prices.
Existing home sales decreased 3.2% m/m to a seasonally adjusted annual rate of 5.38 million units in January. Inventory level increased in January, rising 4.1% to 1.52 million units. The combination of lower home sales and higher inventory increased the implied supply to 3.4 months at current sales pace, but it was still lower than this time a year ago. Homes were sold quickly after listing. Typical homes stayed on the market for just 42 days in January, vs. 50 days a year ago. For realtors and loan officers, this means that while homebuyers may need more time finding the right home, once they have found the right one, they will act fast to close the sale. The tight housing market condition continued to drive home prices higher, with the median home price up 5.8% from a year ago to $240,500. Regionally, only the South region reported positive year over year growth in sales.
New home sales decreased 7.8% m/m to a seasonally adjusted annual rate of 593,000 units in January. The median sales price for new homes increased 2.5% to $323,100 in January, which was 34% higher than the median price for existing homes. Regionally, both the South and the Northeast reported weaker sales compared to a year ago, but sales in the West were stronger.