Commonwealth Standard Real Estate is pleased to share the latest trends in the housing market. Existing home sales have seen a slower month of activity as the year 2018 begins according to the National Association of Realtors. All significant regions across the United States had seen slow movement in sales due to the already slim inventory combined with the usual slow down during the winter months.
Total existing sales for closings of single family homes, townhomes, condos and co-ops dipped by 3.2% in January to a seasonally adjusted rate of 5.38 million.
Lawrence Yun, NAR chief economist, says January’s retreat in closings highlights the housing market’s glaring inventory shortage to start 2018. “The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month,” he said. “While the good news is that Realtors® in most areas are saying buyer traffic is even stronger than the beginning of last year, sales failed to follow course and far lagged last January’s pace. It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”
Inventory did see a small increase by the end of January by 4.1%. However, this figure was still 9.5% lower than a year ago at this time as inventory has been consistently falling month over month. Unsold inventory is at a 3.4 month supply at the current sales pace.
“Another month of solid price gains underlines this ongoing trend of strong demand and weak supply. The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability,” said Yun. “However, there’s hope that the tide is finally turning. There was a nice jump in new home construction in January and homebuilder confidence is high. These two factors will hopefully lay the foundation for the building industry to meaningfully ramp up production as this year progresses.”
Other factors playing their part in shaping the real estate market landscape include a small uptick in the average rate for a 30 year fixed-rate mortgage to 4.03% up from 3.95% the month prior. Properties also were active on the market for an average of 42 days in January which was up from 40 the month prior, but down from a year ago at 50 days. Nearly half of the properties sold in the month of January were on the market for less than one month.