Following a decline in December, existing-home sales were on the rebound in January, according to the National Association of Realtors (NAR). Every sales region in the country reported month-over-month gains. For year-over-year figures, two regions reported a drop in sales, while a third saw sales gains and a fourth experienced no change. According to Lawrence Yun, chief economist for NAR, the increase can be attributed to several factors. "Buyers were likely anticipating further rate increases and locking in at the low rates, and investors added to overall demand with all-cash offers." Yun expects housing prices to continue to climb due to the increase in demand.

Property Prices Up
All-cash sales accounted for 27% of all home purchases in January, up from 19% a year ago. First-time buyers, meanwhile, accounted for 27% of all transactions, down from 33% in January 2021. The strong demand from all-cash investors and the solid demand from first-time buyers led to high home prices in January. The median existing-home sales price climbed 15.4% year over year, marking the 119th month in a row of year-over-year price increases—a new record. Every sales region in the country posted price increases. The average property remained available for just 19 days, unchanged from a month ago but down from 21 days a year ago. Of all the homes sold in January, 79% were available for under one month.

Available Homes at Record Low
According to Yun, "The inventory of homes on the market remains woefully depleted, and in fact is currently at an all-time low." By the end of December, the supply of unsold existing homes fell to 860,000, the equivalent of a 1.6-month supply at the current sales pace. In comparison, there was a 1.7-month supply of homes available in December and a 1.9-month supply available a year ago.

Affordability Problems
The lack of supply and consequent rising home prices is leading to affordability issues, particularly for homes at the lower end of the price range. "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." However, Yun noted, "More supply is needed at the lower end of the market in order to achieve more equitable distribution of housing wealth." A predicted increase in mortgage rates may pose additional affordability problems in the coming months. Yun warned that moderate-income buyers who almost didn’t qualify for a mortgage under lower interest rates may be unable to afford a mortgage once rates climb. In addition, "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."

Regional Breakdown

Northeast: Existing-home sales annual rate of 780,000; an increase of 6.8% from December 2021 but a decrease of 8.2% from January 2021. The median sales price of $382,800 increased 6% from January 2021.

Midwest: Existing-home sales annual rate of 1.51 million; an increase of 4.1% from December 2021 and unchanged from January 2021. The median sales price of $245,900 increased 7.8% from January 2021.

South: Existing-home sales annual rate of 2.94 million; an increase of 9.3% from December 2021 and 0.3% from January 2021. The median sales price of $312,400 increased 18.7% from January 2021.

West: Existing-home sales annual rate of 1.27 million; an increase of 4.1% from December 2021 but a decrease of 6.6% from January 2021. The median sales price of $505,800 increased 8.8% from January 2021.