By Manuel Gutierrez, Consulting Economist to NKBA

 

The monthly pace of existing home sales slid by 0.7 percent in January, marking 12 straight months of decline, to an annualized rate of 4 million homes. Sales are down 37 percent from January 2022, when they were running at a pace of 6. 34 million. 

  • The drop seems counterintuitive, since mortgage rates and inflation have started to ease, and inventory of houses for sale has inched higher. But the Federal Reserve shows no signs of slowing interest-rate hikes, and consumers are still skittish about the economy and feeling  pinched by how far their dollars will go.
  • The inventory of homes for sale improved in January to 980,000, which is 15 percent higher than the 850,000 houses for sale a year ago. At the current sales pace of 4 million houses a year, there’s enough inventory for 2.9 months — slightly below the last six years’ average of 3.2 months.
  • Regionally, the West recorded the biggest monthly sales increase, up 2.9 percent in January to 720,000 units. Sales in the South, which represents 46 percent of the nation’s transactions, rose 1.1 percent to 1.82 million homes.
  • However, sales in the Midwest dropped 5 percent from December to 960,000 homes, while in the Northeast, sales were off 3.8 percent to 500,000 houses.
  • Despite the modest monthly gains in the South and West, home sales in all four regions are sharply lower YOY: The Midwest saw sales fall by 30 percent, the Northeast was off 33 percent, the South fell 34 percent, and the West declined a whopping 41 percent from January 2022.
  • The median price of an existing home was $529,000 in January, a modest 1.3 percent higher YOY. This is the smallest annual increase in house prices the past decade, which saw 6 percent spikes each year on average.
  • The West has the highest home prices in the nation, with a median of $525,000 in January, but still down 5 percent from a year ago. The Northeast median house price is $383,000, virtually unchanged YOY. The South posted $332,000 for the month, up 3.4 percent YOY, while the Midwest crept up 2.7 percent YOY to $252,000.