Some good news amid the ongoing pandemic: existing-home sales rose in January, marking two consecutive months of growth, according to the National Association of Realtors.
From a month-over-month perspective, buying activity varied in the major regions. Year-over-year, all four areas recorded double-digit gains in January, according to a NAR news release.
Total existing-home sales,1 completed transaction that includes single-family homes, townhomes, condominiums, and co-ops, increased 0.6% from December to a seasonally-adjusted annual rate of 6.69 million in January. Sales in total climbed year-over-year, up 23.7% from a year ago (5.41 million in January 2020).
“Home sales continue to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market,” said Lawrence Yun, NAR’s chief economist in the news release. “Sales easily could have been even 20% higher if there had been more inventory and more choices.”
Median Existing Home Price
The median existing-home price2 for all housing types in January was $303,900, up 14.1% from January 2020 ($266,300), as prices increased in every region. January’s national price jump marks 107 straight months of year-over-year gains.
Whereas much of the economy has suffered due to COVID-19, the housing sector has been one of the few bright spots, according to Yun. In NAR’s latest quarterly report, home prices in every tracked U.S. metro area increased during the fourth quarter of 2020, according to the news release.
“Home sales are continuing to play a part in propping up the economy,” Yun said. “With additional stimulus likely to pass and several vaccines now available, the housing outlook looks solid for this year.”
Yun said he expects more jobs to return, which will spur homebuying in the coming months. He predicts existing-home sales will reach at least 6.5 million in 2021, even as he says mortgage rates are likely to inch higher due to the rising budget deficit and higher inflation.
Total Housing Inventory
Total housing inventory3 at the end of January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million). Unsold inventory sits at a 1.9-month supply at the current sales pace, equal to December’s supply and down from the 3.1-month amount recorded in January 2020. NAR first began tracking the single-family home supply in 1982.
Properties typically remained on the market for 21 days in January, seasonally even with December, and down from 43 days in January 2020. Seventy-one percent of the homes sold in January 2021 were on the market for less than a month.
First-time buyers were responsible for 33% of sales in January, up from 31% in December 2020 and from 32% in January 2020. NAR’s 2020 Profile of Home Buyers and Sellers – released in late 20204 – revealed that the annual share of first-time buyers was 31%, the news release added.
Individual investors or second-home buyers, who account for many cash sales, purchased 15% of homes in January, up modestly from 14% in December 2020, but down from 17% in January 2020. All-cash sales accounted for 19% of transactions in January, unchanged from December but down from 21% in January 2020.
Distressed sales5 – foreclosures and short sales – represented less than 1% of sales in January, equal to December’s percentage but down from 2% in January 2020.
According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 2.74% in January, up from 2.68% in December. The average commitment rate across all of 2020 was 3.11%, the news release said.
Single-family and Condo/Co-op Sales
Single-family home sales rose at a seasonally-adjusted annual rate of 5.93 million in January, up 0.2% from 5.92 million in December, and up 23.0% from one year ago. The median existing single-family home price was $308,300 in January, up 14.8% from January 2020.
Existing condominium and co-op sales were recorded at a seasonally-adjusted annual rate of 760,000 units in January, up 4.1% from December and up 28.8% from one year ago. The median existing condo price was $269,600 in January, an increase of 8.6% from a year ago.
Compared to one year prior, median home prices rose at double-digit rates in each of the four major regions.
January 2021 witnessed existing-home sales in the Northeast fall 2.2%, recording an annual rate of 870,000, a 24.3% increase from a year ago. The median price in the Northeast was $361,400, up 15.8% from January 2020.
Existing-home sales in the Midwest inched up 1.9% to an annual rate of 1,570,000 in January, a 22.7% jump from a year ago. The median price in the Midwest was $227,800, a 14.7% increase from January 2020.
Existing-home sales in the South grew 3.2%, posting an annual rate of 2,940,000 in January, up 25.1% from the same time one year ago. The median price in the South was $263,300, a 14.6% climb from a year ago.
Existing-home sales in the West fell 4.4% from the month prior, recording an annual rate of 1,310,000 in January, a 21.3% increase from a year ago. The median price in the West was $461,800, up 16.1% from January 2020.
1 Existing-home sales, which include single-family, townhomes, condominiums, and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. Also, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample – about 40% of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Before this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales before 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (before 1999, single-family sales accounted for more than 90% of transactions, and condos were measured only quarterly).
4 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors Confidence Index, which includes all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.
5 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions, and investors are from a monthly survey for the NAR’s Realtors® Confidence Index.