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Existing home sales see full year of decline
January marked 12 consecutive months of declining existing home sales as sales fell 0.7 percent during the month to a seasonally adjusted annual rate of 4 million units, representing a 38.4 percent decrease compared to a year ago. NAFCU Chief Economist and Vice President of Research Curt Long noted this data “foil[s] hopes of a mild rebound.”
“Homebuilders and realtors alike shared anecdotes of increased foot traffic during the month as a drop in mortgage rates brought buyers off the sidelines,” Long said in a new Macro Data Flash report. “But sales nevertheless sunk to a post-financial crisis low due to constrained supply.”
Existing home sales in January were mixed across regions, falling in the Midwest (-5 percent) and Northeast (-3.8 percent), but rising in the West (+2.9 percent) and South (+1.1 percent). Based on current sales, there were 2.9 months of supply at the end of the month; analysts consider 6 months of inventory a rough balance between supply and demand.
In addition, the median existing home price – not seasonally adjusted – fell 2 percent in January to $359,000.
“Despite the enormous drop in sales over the past year, the median sales price was still 1.3 percent higher than January 2022,” Long said. “With rates rising once more, demand is likely to ebb, but with little impact on sales. NAFCU expects stable sales volume in 2023, with any rate volatility simply impacting price growth.”