Tirachard / Adobestock
The housing market is giving signs that home sales may be bottoming out. For the 12th consecutive month, existing-home sales dropped, according to the National Association of Realtors (NAR). January sales fell a slight 0.7% from December but were down 36.9% from January 2022. While every sales region in the country experienced declines in year-over-year sales, month-over-month sales increased in the South and West but declined in the East and Midwest. According to Lawrence Yun, chief economist for NAR, these regional differences were linked to affordability in each market: “Prices vary depending on a market’s affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines.”
Where Are Home Prices?
Housing prices were up in January, the 131st month in a row of year-over-year price increases. The median existing-home price for all housing types climbed to $359,000. This was an increase of 1.3% from a year ago. What’s more, prices rose in three of the country’s sales regions, with only the West reporting price declines.
Housing Inventory Improving
By the end of January, there were 980,000 units available on the housing market, up 2.1% from a month ago and 15.3% from a year ago. At the current sales pace, unsold inventory would supply the market for 2.9 months, unchanged from December but up from just a 1.6-month supply a year ago. While inventory levels remain low, the market is starting to shift by providing buyers with better negotiating power. “Homes sitting on the market for more than 60 days,” added Yun, “can be purchased for around 10% less than the original list price.” On average, homes remained available for 33 days in January, an improvement from 26 days a month ago and 19 days a year ago. Of all the homes sold in January, 54% were available for less than 30 days.
Who's Buying?
First-time buyers are finding their foothold in today’s market, accounting for 31% of all transactions in January; this is unchanged from a month ago and up from 27% a year ago. According to the NAR “2022 Profile of Home Buyers and Sellers,” the annual share of first-time buyers was just 26%, the lowest on record. All-cash sales, meanwhile, represented 29% of all sales transactions, up from 28% in December and 27% in January 2022. Many cash sales are made by individual investors or second-home buyers, and these two groups purchased 16% of homes in January, stable from a month ago but down from 22% a year ago. Distressed sales remained steady from both a month and a year ago at 1% of all January transactions.
Regional Breakdown
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Northeast: Existing-home sales decreased 3.8% from December 2022 and 35.9% from January 2022. The median sales price increased 0.3% from January 2022.
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Midwest: Existing-home sales decreased 5% from December 2022 and 33.3% from January 2022. The median sales price increased 2.7% from January 2022.
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South: Existing-home sales increased 1.1% from December 2022 and decreased 36.6% from January 2022. The median sales price increased 3.4% from January 2022.
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West: Existing-home sales increased 2.9% from December 2022 but decreased 42.4% from January 2022. The median sales price decreased 4.6% from January 2022.
