Across the board, home sales are up in January, rising 6.7% compared to December, increasing in all regions, according to the National Association of Realtors (NAR).
While this is great news for homeowners looking to sell, and agents guiding those transactions, it is but a silver lining in the market where inventory levels and housing prices continue to edge would-be homeowners out of the market.
NAR reports that inventory of unsold existing homes hit an all-time low in January, and the median sales price rose 15.4% annually to $350,300, marking the 119th consecutive month of monthly increases.
“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 Dr. Lawrence Yun, NAR’s Chief Economist. “Consequently, housing prices continue to move solidly higher,” and inventory levels remain “woefully depleted.”
Dr. Yun indicates that the supply of homes under $500,000 are “disappearing,” which will lead to a market focused on higher-income consumers.
“Clearly, more supply is needed at the lower-end of the market in order to achieve more equitable distribution of housing wealth,” Dr. Yun observed.
In recent years, first time buyers accounted for 30% of all sales, but even that dipped in January to 27%.
Moderate-income buyers will be impacted as mortgage rates are expected to increase throughout the year. Those are the buyers who Dr. Yun says “barely qualified for a mortgage when interest rates were lower will now be unable to afford a mortgage.”
Sales rose in the Northeast 6.8% monthly, yet dipped 8.2% compared to January 2021. The Midwest saw a 4.1% increase monthly, and are equal to this time last year. In the South, sales rose 9.3% for the month and rose a meager 0.3% annually. Sales in the West rose 4.1% from the previous month, but are down 6.6% from January 2021.
Median prices rose in the Northwest by 6.0% to $382,800 from January 2021, up 7.8% to $245,900 in the Midwest, up 18.7% to $312,400 in the South, and up 8.8% to $505,800 in the West.
With the surge in the South, Dr. Yun identifies that “migration to the Southern states is clearly getting reflected in higher home sales and fast rising home prices compared to other regions.”
With inventory persistently tight and prices sliding ever upward, this year is going to be difficult for the market, regardless of sales rates.