Existing home sales rebound, leaving record inventory

Existing home sales rose 6.7% in January after a decline the previous month, leaving record inventory as prices continue to climb, according to the latest data from the National Association of Realtors.

Home sales rebounded in January, leaving record inventories. (AP Photo/Michael Conroy, File/AP Newsroom)

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Sales of previously occupied homes rose in all regions last month, reaching a seasonally adjusted annual rate of 6.5 million after falling in December. The rebound left a record inventory of 860,000 unsold units at the end of January.

“The inventory of homes on the market remains woefully depleted, and in fact is currently at an all-time low,” said Lawrence Yun, chief economist of NAR.

HOUSING INFLATION AND THE SUPPLY CHAIN ​​CREATE A PERFECT STORM FOR BUILDERS

Buyers were also willing to shell out more to secure a deal last month, with selling prices jumping 15.4% year-over-year to $350,300. Yun says rising interest rates are the reason for this trend.

sale house

A pending sale sign is displayed outside a residential home for sale in East Derry, New Hampshire. (AP Photo/Charles Krupa, File/AP Newsroom)

“Buyers were likely anticipating further rate hikes and a low rate lock-in, and investors added to aggregate demand with all-cash offers,” he said. “As a result, housing prices continue to rise solidly.”

FED SIGNALS ‘FASTER’ INTEREST RATE HIKES LIKELY AS INFLATION RISE TO 40-YEAR HIGH

The average rate for a 30-year fixed-rate mortgage is approaching 4% according to the latest weekly figures from Freddie Mac, hitting 3.96% – a high not seen since May 2019. Rising rates are further fueling the trend in potential buyers being increasingly out of the market at the lowest prices.

Last month, the percentage of first-time buyers responsible for sales fell to 27%, from 30% in December and 33% in January of the previous year according to the NAR.

residence

A man walks past open door signs in front of condominiums for sale in Santa Monica, California. (REUTERS/Lucy Nicholson/Reuters Photos)

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“There are more listings at the high end – homes priced over $500,000 – compared to a year ago, which should lead to less hasty decisions by some buyers “, explained Yun. “Clearly, more supply is needed at the bottom of the market in order to achieve a fairer distribution of real estate wealth.”