Washington: Existing home sales in the U.S. unexpectedly showed a steep drop in the month of January, according to a report released by the National Association of Realtors on Thursday.
NAR said existing home sales tumbled by 1.2 percent to an annual rate of 4.94 million in January after plunging by 4.0 percent to a revised rate of 5.00 million in December.
The continued decrease surprised economists, who had expected existing home sales to climb by 1.0 percent to a rate of 5.04 million from the 4.99 million originally reported for the previous week.
With the third consecutive monthly decrease, existing home sales slumped to their lowest annual rate since November of 2015. Existing home sales were also down 8.5 percent from a year ago.
“Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low,” said NAR chief economist Lawrence Yun.
He added, “Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.”
The median existing home price for all housing types was $247,500 in January, down 2.8 percent from $254,7000 in December but up 2.8 percent from $240,800 a year ago.
While noting the year-over-year median home price growth is the slowest since February 2012, Yun cautioned that the figures do not yet tell the full story for the month of January.
“Lower mortgage rates from December 2018 had little impact on January sales, however, the lower rates will inevitably lead to more home sales,” Yun said.
Total housing inventory increased to 1.59 million existing homes available sale at the end of January, representing 3.9 months of supply at the current sales pace.
The report single family home sales tumbled by 1.8 percent to a rate of 4.37 million in January, while existing condominium and co-op sales surged up by 3.6 percent to a rate of 570,000.
Why Markets Care About Existing Home Sales Also Called Home Resales
Existing Home Sales report is released monthly, about 20 days after the month ends, by the National Association of Realtors (NAR).
It measures annualized number of residential buildings that were sold during the previous month, excluding new construction. While this is monthly data, it’s reported in an annualized format (monthly figure x12).
The Existing-Home Sales data measures sales and prices of existing single-family homes for the nation overall, and gives breakdowns for the West, Midwest, South, and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.
Existing Home Sales is a leading indicator of economic health because the sale of a home triggers a wide-reaching ripple effect. For example, renovations are done by the new owners, a mortgage is sold by the financing bank, and brokers are paid to execute the transaction.