Following a cycle low in December, existing home sales rose to a 5-month high to start the year, according to the National Association of Realtors (NAR). Low resale inventory and strong demand continued to drive up existing home prices, marking the seventh consecutive month of year-over-year median sales price increase. It is also the first time in 14 months that price growth has outpaced wage growth. However, recent declines in mortgage rates and a continued improvement in inventory are expected to fuel more demand in the coming months.
Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 3.1% to a seasonally adjusted annual rate of 4.00 million in January. On a year-over-year basis, sales were 1.7% lower than a year ago.
The first-time buyer share fell to 28% in January, down from 29% in December 2023 and from 31% in January 2023. The inventory level rose from 0.99 million in December to 1.01 million units in January and is up 2.0% from a year ago.
At the current sales rate, January unsold inventory sits at a 3.0-months’ supply, down from 3.1-months last month but up from 2.9 months a year ago. This inventory level remains very low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction.
Homes stayed on the market for an average of 36 days in January, up from 29 days in December 2023 and 33 days in January 2023.
The January all-cash sales share was 32% of transactions, up from 29% in both December and a year ago. This marked the highest share in 10 years. All-cash buyers are less affected by changes in interest rates.
The January median sales price of all existing homes was $379,100, up 5.1% from last year. This marked the highest recorded price for the month of January since 1999. The median condominium/co-op price in January was up 5.7% from a year ago at $339,400.
Existing home sales in January were mixed across the four major regions. Sales in the Midwest, South and West increased 2.2%, 4.0% and 4.3% in January, while sales in the Northeast remained unchanged. On a year-over-year basis, the West was the only region to experience an improvement in sales, with a 2.8% gain. In contrast, the other three regions continued to see a decline in sales, ranging from -1.6% in the South to -5.9% in the Northeast.
The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI rose to 77.3 in December, the highest level since August 2023. On a year-over-year basis, pending sales were 1.3% higher than a year ago per the NAR data.
