January was a strong month for the housing market with existing home sales setting an incredible pace.
Last month, there was a 3.3 percent increase in existing home sales. Adjusted annually, that would result in 5.69 million homes being sold in a year.
The staggering growth of existing home sales is a positive sign for just about anyone. For homeowners, it is good to know that homes are still being sold despite rising mortgage rates over the past few months.
For home buyers, the rising rate of sold homes means that the national housing shortage is manageable.
There has been a shortage of available homes, both new and existing, for well over a year. At times, home buyers have had trouble finding a home for a reasonable price.
The quick increase in the number of existing homes sold is a good sign. While there are still fewer available homes today than there were a year ago, it could mean that there are slowly becoming more homes available.
As far as existing home sales go, there was good and bad news for both home buyers and homeowners looking to sell. Fortunately, the housing market is strong, so both sides can take away more positives than negatives.
This could even more true for home buyers. With mortgage rates holding relatively still and the number of existing homes being sold rising, the next few months could be ideal for finding the perfect home.
About Existing Home Sales
Each month, the National Association of Realtors (NAR) tracks the number of homes sold. The existing home sales report is part of this, and it tracks all homes that are not newly built. This includes houses, townhouses, co-ops and condos.
In January, the total number of existing homes sold increased. The increase of 3.3 percent was one of the largest single month jumps in recent history.
Not all parts of the report were ideal for home buyers, however. According to the NAR, the median price for existing homes rose. Last month, the median cost was $228,900, a sizeable jump from one year ago.
However, the jump from January of 2017 to January of 2016 was smaller than previous changes in cost. This could mean that while the prices of homes are still rising, they may be rising at a slower pace.
This would be good news for home buyers. As mortgage rates rise, homes become more expensive to buy. While an increase in the value of homes is expected, smaller increases mean a smaller mortgage.
Also, the number of days that homes were on the market dropped from previous months. Last month, existing homes were on the market for an average of 50 days. This is down from 52 days in December of 2016 and 64 days from one year ago.
Again, this isn’t quite good news for home buyers. However, homeowners looking to sell their home can be confident in knowing that the market is strong and their home could potentially sell fairly quickly.
Existing Houses Getting Sold Quickly
In an imaginary scenario, the NAR tracks how long it would take all homes on the market to sell if the current pace continued. Of course, this is not a feasible scenario since there are more homes constantly being added.
According to the NAR, it would take 3.6 months to sell all homes on the market. While this would never happen, it represents the amount of time it takes to sell a home as well as the total number of homes available on the market.
For home buyers, a larger amount of time represents more available homes.
For current homeowners, a lower amount of time means that it is easier to sell their current home on the market.
January’s 3.6 month unsold inventory supply is unchanged from December of last year, but that number could be rising in coming months.
Current Mortgage Rates
Mortgage rates have been rising gradually for the past few months, and that makes home buying more expensive.
However, current rates are still much lower than they have been historically. Rates are expected to rise throughout the year, so keeping track of rates could help when looking to buy a home.