U.S. January Home Sales Reach Highest Level in a Decade -- Update
February 22 2017 - 11:54AM
Dow Jones News
By Laura Kusisto and Eric Morath
U.S. home sales rose in January to the highest level since
February 2007, a sign last year's momentum in the sector extended
into 2017 despite a limited supply of properties-for-sale and
rising prices.
Purchases of previously owned homes, which account for the vast
majority of U.S. sales, increased 3.3% from December to a
seasonally adjusted annual rate of 5.69 million last month, the
National Association of Realtors said Wednesday.
Warm weather and slightly lower mortgage rates helped fuel
better-than-expected demand. Economists surveyed by The Wall Street
Journal expected home sales to rise 1.1%, following a 2.8% decline
last month.
"Buyers are in force in 2017," said Nela Richardson, chief
economist at online property brokerage Redfin Corp. Ms. Richardson
said the firm is seeing the highest demand for homes -- as measured
by the number of tours buyers are taking and offers they are
writing -- since January 2013.
Inventory rose 2.4% at the end of January from the end of
December, when supply hit the lowest level since the Realtors
association began tracking all types of supply in 1999. Still,
inventory still was down 7.1% from a year earlier, which is a more
reliable measure because December is historically a slow time for
buyers to put homes on the market. At the current sales pace, it
would take 3.6 months to exhaust the supply of existing homes on
the market, the Realtors said Wednesday.
A lack of available properties could put a brake on purchases
despite low unemployment and rising incomes supporting demand for
homes. "There is tremendous resilience among consumers of wanting
to buy a home, but we just don't have homes for a sale," Realtors
economist Lawrence Yun said.
Low inventory is also helping to push up prices. The median sale
price rose 7.1% in January from a year earlier, to $228,900. That,
combined with higher mortgage rates, made affordability more of a
challenge for home buyers last month.
Rising mortgage rates are also putting pressure on
affordability. Rates for a 30-year mortgage held at 4.15% last
week, down slightly from a week earlier but up from about 3.5%
before the election, according to mortgage company Freddie Mac.
David Berson, chief economist at Nationwide Insurance, said
home-price gains of 3% to 4% is considered sustainable. The current
rate of price appreciation "is ultimately not a positive thing
because it keeps first-time buyers out of the market," he said.
Low inventory is likely to continue to be a challenge throughout
the year. U.S. housing starts dropped 2.6% in January to a
seasonally adjusted rate of 1.246 million, below the revised
December rate of 1.279 million, the Commerce Department said
Thursday.
News Corp, owner of The Wall Street Journal, also operates
Realtor.com under license from the National Association of
Realtors.
"Overall, this is an exceptionally strong way to start the year,
and it's clear that demand is likely to continue to be very high as
the market enters the spring, even if inventory remains low and
affordability suffers somewhat from rising mortgage interest
rates," said Svenja Gudell, chief economist at Zillow.
Write to Laura Kusisto at laura.kusisto@wsj.com and Eric Morath
at eric.morath@wsj.com
(END) Dow Jones Newswires
February 22, 2017 11:39 ET (16:39 GMT)
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