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First Cut: January existing home sales slip month-over-month, but still robust

The NAR data on sales of existing homes saw a slip of 1.3% to 5.46 million units (SAAR) in January from 5.53 million in December. However, that is the second highest rate in since the modest 4.98 million units sold in January 2019, and an increase of 9.6% year-over-year. Sales in late 2018 were restrained by more elevated mortgage interest rates which peaked in November 2018. The pace picked up quickly once rates started to fall again in December 2018 and into January 2019. The Freddie Mac average rate for a 30-year fixed rate mortgage was 3.62% in January 2020, down from 3.72% in December, and a substantial decline from the 4.46% in January 2019 and 4.64% in December 2018. In combination with the strong labor market and rising incomes, homebuying has steadily risen over the past year.

The report included annual revisions.

The pace of sales might have been even higher in January except that the supply of homes available for sale was exceptionally tight. In January, there was 3.1 month’s worth of homes on the market, a scant increase from the 3.0 months in December. Even with supplies limited, homebuyers are driving hard bargains and keeping prices from rising more quickly. The median price of an existing home was down 3.0% in January to $266,300 from $274,500 in December, but up 6.8% from $249,400 in January 2019.

Sales of existing homes were uneven across regions. Sales in the Northeast were flat in January, holding at their near-term peak. Unchanged was not indicative of softness. Much the same might be said of the narrow 0.4% in the South where sales are also at near-term peaks. Sales declined 9.4% in the West, but this was off an exceptionally strong prior month. The rise of 2.4% in the Midwest left the total on the high end of the recent trend of sales and was coming off a slightly softer month.

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