US Housing Market Continues to Cool in January
By The U.S. housing market continued its cooling trend in January, with existing-home sales falling for the twelfth consecutive month and housing starts declining 4.5%. According to the latest report from the National Association of Realtors®, existing home sales fell 0.7% last month to a seasonally adjusted and annualized rate of 4.00 million units. The median existing-home sales price increased 1.3% from a year ago to $359,000.[0]
Housing starts, which measure the annualized change in the number of new residential buildings that began construction, are reflective of the current housing dynamic.[1] Housing starts fell 4.5% last month to an annual rate of 1.31 million units, according to new Commerce Department data released on Thursday. Refinitiv economists' forecast is for a pace of 1.35 million units, which is lower than anticipated.[2]
At the conclusion of January, there were 980,000 housing units available, representing a 2.1% increase since December, and a 15.3% increase since the same time last year.[3] In January, properties were typically on the market for 33 days, an increase from 26 days in December and 19 days in January of the previous year.[4] 54% of homes sold in January were on the market for less than 30 days.[5]
On Tuesday, Freddie Mac reported that the average rate on a 30-year fixed-rate mortgage had decreased from its peak, yet it was still 2 percentage points higher than it had been a year ago, at 6.32%.[6] The average 15-year fixed-rate mortgage had a rate of 5.51%.[1] The ultra-low level mortgage rates during the pandemic were significantly lower than the current numbers.[1]
“We may have to wait another month or two to see what buyers are planning this year since new listings are currently trickling out at near-record low levels,” said Jill Oudil, chair of the national real estate board.[7] As the temperature rises, however, this should shift.[7]
Higher interest rates, put in place by the Federal Reserve with the intention of reducing inflation, have caused mortgage rates to increase, making home ownership inaccessible for many and creating a significant impact on the housing market.[2] In January, first-time buyers accounted for 31% of sales, which is the same as December but an increase from 27% in January 2022.[3] Distressed sales – foreclosures and short sales – represented 1% of sales in January, identical to last month and one year ago.[3]
0. “US: Existing Home Sales decline by 0.7% in January vs +0.1% expected” FXStreet, 21 Feb. 2023, https://www.fxstreet.com/news/us-existing-home-sales-decline-by-07-in-january-vs-01-expected-202302211507
1. “Existing-home sales down nearly 37% from a year ago” Washington Examiner, 21 Feb. 2023, https://www.washingtonexaminer.com/policy/economy/existing-home-sales-down-37-percent
2. “Housing starts fall in January to the lowest level since 2020” Fox Business, 16 Feb. 2023, https://www.foxbusiness.com/economy/housing-starts-fall-january-lowest-level-2020
3. “US January existing home sales 4.00M versus 4.10M estimate” ForexLive, 21 Feb. 2023, https://www.forexlive.com/news/us-january-existing-home-sales-400m-versus-410m-estimate-20230221
4. “Home sales sank in January for the 12th straight month” erienewsnow.com, 21 Feb. 2023, https://www.erienewsnow.com/story/48420325/home-sales-sank-in-january-for-the-12th-straight-month
5. “Existing-Home Sales Descended 0.7% in January” National Association of Realtors, 21 Feb. 2023, https://www.nar.realtor/newsroom/existing-home-sales-descended-0-7-in-january
6. “Home Sales Continue to Slow” Barron's, 21 Feb. 2023, https://www.barrons.com/articles/home-sales-continue-to-slow-but-the-bottom-could-be-near-bf6ec11a
7. “Canada home sales broke a 14-year record in January | Canada” Daily Hive, 15 Feb. 2023, https://dailyhive.com/canada/canada-home-sales-broke-record-january
