Home sales in the U.S. jumped in the first month of 2022, while the number of homes for sales hit a new record low.
Existing home sales rose 6.7% to a seasonally adjusted 6.50 million million units in January from a month earlier, the highest rate in 12 months, according to the National Association of Realtors (NAR). The number of sales was down 2.3% from the same month a year ago. Home sales in December were revised down to 6.09 million from 6.18 million. The results far exceeded analysts’ expectations of a 1.3% month-over-month decline to 6.1 million units, according to Bloomberg consensus estimates.
“Buyers were likely anticipating further rate increases and locking-in at the low rates, and investors added to overall demand with all-cash offers,” said Lawrence Yun, NAR’s chief economist. “Consequently, housing prices continue to move solidly higher.”
The median existing-home price for all housing types in January was $350,300, up 15.4% from January 2021 ($303,600), as prices rose in each region. Home prices were driven up by sales of more expensive homes priced above $500,000.
“The narrative is the same, few sales are occurring in the low end because of the lack of inventory,” said Yun, adding that homes priced at $500,000 and below are disappearing, while supply has risen at the higher price range. He noted that such increases will continue to shift the mix of buyers toward high-income consumers.
The number of sales for homes under $100,000 fell 17% from a month ago, compared to sales for homes between $250,000 to $500,000 and $500,000 to $750,000 rose 4% and 26%, respectively. Meanwhile sales of homes between $750,000 to $1 million and homes above $1 million increased 33% and 39%, respectively.
“There are more listings at the upper end — homes priced above $500,000 — compared to a year ago, which should lead to less hurried decisions by some buyers,” Yun added. “Clearly, more supply is needed at the lower-end of the market in order to achieve more equitable distribution of housing wealth.”
The share of first-time homebuyers was 27% in January, one of the lowest observed (the lowest was 26% in November 2021), according to Yun. That was down from 30% in December.
Sales activity was likely driven by investors or second-home buyers, which represented 22% of sales, up from 17% in December and 15% a year ago, said Yun, adding that all cash-deals, which tend to be linked to investors, accounted for 27% of transactions, compared to 23% in December and 19% the same month a year earlier.
Total housing inventory at the end of January was 860,000 units, down 2.3% from December and down 16.5% from one year ago (1.03 million) — a record low since the NAR started tracking the data in 1999 for all types of homes.
“It’s the lowest inventory count in modern history,” Yun said, noting that NAR starting tracking inventory for single family homes in 1982.
At the current pace of sales it would take 1.6 months to exhaust the homes for sale, also a new low. Unsold inventory is down from 1.7 months in December and from 1.9 months in January 2021.
The results are in line with a report released last week by Realtor.com that said in the first month of the year, the typical U.S. home sold faster than in any prior January at 61 days on the market, according to its Monthly Housing Report.
“Our expectation is that we’ll continue to see home sales at a relatively high level throughout 2022, as post-pandemic shifts like rising workplace flexibility enable would-be buyers to expand their geographic search horizons and find an affordable place to call home,” Realtor.com Chief Economist Danielle Hale said in a statement after the results.
But the housing activity momentum may be slowed down by increasing interest rates. Mortgage rates have been inching closer to 4%, jumping last month to their highest level since March 2020. The rates on the most common mortgage, the 30-year fixed, hit 3.92% this week, according to Freddie Mac.
“Some moderate-income buyers who barely qualified for a mortgage when interest rates were lower will now be unable to afford a mortgage… consumers in expensive markets, such as California and the New York City metro area, will feel the sting of nearly an additional $500 to $1000 in monthly payments due to rising rates,” Yun said.
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Amanda Fung is an editor at Yahoo Finance. Follow her on Twitter: @amandafung
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