Existing Home Sales Decline, Inventory Still a Big Issue

Marco Green
February 21, 2018

Inventories of existing homes continue to lean at 1.71 million units on a seasonally adjusted basis.

NAR's Existing-Home Sales calculations track "completed transactions that include single-family homes, townhomes, condominiums, and co-ops". Last month's sales level represented a 4.8 percent decline from one year earlier, and were also the largest annual decline since August 2014 at 5.5 percent and at the slowest pace since the 5.37 million recorded last September. Existing-home sales saw a 3.2 decrease in January, hitting a seasonally adjusted annual rate of 5.38 million.

Sales of previously owned, or existing, homes slumped last month. Moreover, the November and December data were downwardly revised, implying weaker momentum in sales heading into the first quarter. Four percent of sales were foreclosures, and 1% were short sales. The months sales results were broad-based.

Looking over the past six years since the start of the housing recovery in February 2012, single-family existing home sales in the West are down 4.8 percent while they are up 27.7 percent in the South, up 24.5 percent in the Northeast and up 29.6 percent in the Midwest.

The median existing-home price for January 2018 was $240,500, up 5.8 percent from January 2017's median of $227,300. Unsold inventory is at a 3.4-month supply at the current sales pace (3.6 months a year ago). According to NAR, January marked the 71st straight month of year-over-year price gains.

The retreat in closings in January probably reflects the glaring lack of inventory, along with increased prices, which is increasingly making certain pockets of the market less affordable. Over the past year, the West has seen the strongest price gains, and the median price of homes sold in the West is now $380,800 - nearly $100,000 more than the median price of existing homes sold in the next-priciest region, the Northeast ($281,300) and nearly double the median price of existing homes sold in the Midwest ($207,000).

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