Existing Home Sales Rise to a One-Year High As Buyers Rush to Lock in Rates
Sales of existing homes increased 6.7% in January to a one-year high as homebuyers sought to lock in mortgage rates before they climb higher.
Combined sales of single-family houses, townhomes, condominiums and cooperatively owned apartments increased to 6.5 million at a seasonally adjusted and annualized pace, according to a Friday report from the National Association of Realtors. Sales were 2.3% lower than a year ago.
Demand for real estate is high as consumers try to buy homes before financing costs rise further, said Lawrence Yun, NAR’s chief economist. The average U.S. rate for a 30-year fixed mortgage was 3.45% in January, rising from 3.10% in December, according to data from Freddie Mac.
“Buyers were likely anticipating further rate increases and locking-in at the low rates and investors added to overall demand with all-cash offers,” Yun said. “Consequently, housing prices continue to move solidly higher.”
The total amount of inventory for sale at the end of January fell to an all-time low of 860,000 homes, a decline of 2.3% from December and down 16.5% from a year ago. The number of unsold homes sits at a 1.6-month supply at the current sales pace, a decline from 1.7 months in December.
“The inventory of homes on the market remains woefully depleted,” Yun said.
The median existing-home price in January was $350,300, a gain of 15.4% from a year earlier, NAR said.
The number of homes sold in 2021 rose 8.5% to 6.12 million, the highest level since 2006, according to NAR data. This year, sales likely will drop 2.8% to 5.95 million, remaining above 2020’s 5.64 million, Yun said.
The U.S. median home price probably will rise 5.1% to $364.700 this year, a slower pace than the record 17% gain seen in 2021, Yun said.