Existing-home sales surged in January 2022, marking a hot start to the year after sales dipped slightly in December amid the holidays, according to data Friday from the National Association of Realtors.
Sales of existing homes rose to a seasonally adjusted rate of 6.5 million, an increase of 6.5 percent from the previous month, according to existing-home sales data for January.
The inventory of existing homes fell to a new low of 860,000, which equals about 1.6 months of the monthly sales pace. That pace was down from 1.7 months in December 2021 and 1.9 months in January 2021.
Existing home prices continued to rise, with the median sales price rising 15.4 percent year over year in January to $350,000.
The spike in sales can likely be attributed to buyers anticipating rising mortgage rates — which have hit 4 percent for the first time in two years — and the prevalence of investors who have the ability to make all cash deals.
“Buyers were likely anticipating further rate increases and locking-in at the low rates, and investors added to overall demand with all-cash offers,” said NAR chief economist Lawrence Yun. “Consequently, housing prices continue to move solidly higher.”
The lack of inventory on the market also continues to drive prices higher, with the 860,000 number for total housing inventory down 16.5 percent from a year ago when it sat at 1.03 million. While the number of lower priced houses continues to dissipate, supply of higher end homes is increasing, according to Yun.
“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,” Yun said. “Clearly, more supply is needed at the lower-end of the market in order to achieve more equitable distribution of housing wealth.”
As interest rates rise, the question remains whether they will have any significant impact on the hyper-competitive housing market.
Realtor.com economist Danielle Hall predicted the current trends will linger throughout the year, with buyers willing to shoulder the extra costs with the housing market overturned by the possibilities of remote work.
“Our expectation is that we’ll continue to see home sales at a relatively high level throughout 2022, as post-pandemic shifts like rising workplace flexibility enable would-be buyers to expand their geographic search horizons and find an affordable place to call home,:” Halle said.