In January 2022, sales of existing homes rose to a seasonally adjusted annual rate (SAAR) of 6.5 million, per data from the National Association of Realtors (NAR) released on Feb. 18, 2022. This was an increase of 6.7% from December 2021, and sales were up in all U.S. regions. The inventory of unsold existing homes was 860,000, equal to 1.6 months of sales at the pace set in January, and both figures set new all-time lows. The median sales price for existing homes is up by 15.4% on a year-over-year (YOY) basis to $350,300.
The upbeat report on existing home sales comes on the heels of two less optimistic readings on the U.S. housing market released earlier this week. In January, housing starts were down, and a widely followed predictor of future single-family housing starts was largely unchanged.
- Existing home sales rose by 6.7% from December 2021 to January 2022 on a seasonally adjusted annual basis.
- However, they were down by 2.3% compared to January 2021.
- The inventory of unsold homes fell to an all-time low.
- The time that homes stay on the market before being bought is shrinking.
- The median price of existing homes is up by 15.4% compared to January 2021.
Sales Up From Prior Month, But Down YOY
Existing home sales represent completed transactions that include single-family homes, townhomes, condominiums, and co-ops. As noted above, this figure rose by 6.7% from December 2021 to January 2022, reaching a seasonally adjusted annual rate of 6.50 million in January. However, on a YOY basis, sales fell by 2.3% from 6.65 million in January 2021.
First-time buyers were responsible for 27% of sales in January 2022, down from 30% in December 2021 and down from 33% in January 2021. The NAR's 2021 Profile of Home Buyers and Sellers, released in late 2021, found that the annual share of first-time buyers was 34%.
Houses Moving Faster
The amount of time that properties typically remained on the market was 19 days in January 2022, equal to the figure for December 2021 but down from 21 days in January 2021. About 79% of the homes sold in January 2022 were on the market for less than a month.
Regarding the 15.4% YOY surge in median home prices, Lawrence Yun, NAR's chief economist, said: "Buyers were likely anticipating further rate increases and locking-in at the low rates, and investors added to overall demand with all-cash offers. Consequently, housing prices continue to move solidly higher."
Yun observed that homes priced at $500,000 and below are disappearing, while supply has risen at the higher price range. He noted that such increases will continue to shift the mix of buyers toward high-income consumers.
Yun added: "There are more listings at the upper end—homes priced above $500,000—compared to a year ago, which should lead to less hurried decisions by some buyers. Clearly, more supply is needed at the lower end of the market in order to achieve more equitable distribution of housing wealth."
As of now, there have been 119 consecutive months of YOY price increases. This is the longest streak on record.
Inventories Reach All-Time Low
Total housing inventory at the end of January 2022 equaled 860,000 units, down by 2.3% from December 2021 and down by 16.5% from 1.03 million in January 2021. Unsold inventory now represents 1.6 months of sales at the current pace, down from 1.7 months in December and down from 1.9 months in January 2021. "The inventory of homes on the market remains woefully depleted, and in fact is currently at an all-time low," Yun said.
Compared to December, each of the four major U.S. regions experienced an increase in sales in January. The northeast was up by 6.8%, the midwest by 4.1%, the south by 9.3%, and the west by 4.1%.
However, on a YOY basis, two regions reported sharp declines (the northeast by 8.2% and the west by 6.6%), one saw a slight sales increase (the south by 0.3%), and a fourth remained flat (the midwest).
Median prices surged in all four regions YOY: by 6.0% in the northeast, by 7.8% in the midwest, by 18.7% in the south, and by 8.8% in the west. The median prices in these regions are now, respectively, $382,800, $245,900, $312,400, and $505,800.
"The migration to the Southern states is clearly getting reflected in higher home sales and fast rising home prices compared to other regions," said Yun.
Impact of Rising Mortgage Rates
Yun observed: "First, some moderate-income buyers who barely qualified for a mortgage when interest rates were lower will now be unable to afford a mortgage. Second, consumers in expensive markets, such as California and the New York City metro area, will feel the sting of nearly an additional $500 to $1,000 in monthly payments due to rising rates."