Existing-Home Sales Increased to 6.50 million in January

Inventory down 16.5% year-over-year

From the NAR: Existing-Home Sales Surge 6.7% in January

Existing-home sales rose in January, making a notable move upward following a previous month where sales declined, according to the National Association of Realtors®. On a month-over-month basis, each of the four major U.S. regions experienced an increase in sales in January. However, year-over-year, activity was mixed as two regions reported sagging sales, another watched sales increase and a fourth region remained flat.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 6.7% from December to a seasonally adjusted annual rate of 6.50 million in January. Year-over-year, sales fell 2.3% (6.65 million in January 2021). ...

Total housing inventory at the end of January amounted to 860,000 units, down 2.3% from December and down 16.5% from one year ago (1.03 million). Unsold inventory sits at a 1.6-month supply at the current sales pace, down from 1.7 months in December and from 1.9 months in January 2021.
emphasis added

The sales rate was above the consensus forecast, as expected by housing economist Tom Lawler.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in January (6.50 million SAAR) were up 6.7% from last month and were 2.3% below the January 2021 sales rate.

The second graph shows existing home sales by month for 2021 and 2022.

Sales declined 2.3% year-over-year compared to January 2021. This was the sixth consecutive month with sales down year-over-year.

The third graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), since 2005. The Orange line is for 2005 (record sales), and the dashed red line is for 2020 (Sales boomed late in the year).

This shows that January and February are usually the lowest sales months of the year NSA, and there is a large seasonal adjustment factor.

Sales NSA in January (352,000) were 3.8% below sales in January 2021 (366,000).   This decrease, NSA, was smaller than the decrease in the markets I track each month.

Housing Inventory is at a Record Low

The fourth graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 0.86 million in January from 0.88 million in December. Inventory is now at a record low.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The fifth graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory is very low and was down 16.5% year-over-year (YoY) in January.  Also, as housing economist Tom Lawler has noted, the local MLS data shows an even larger decline in active inventory (the NAR appears to include some pending sales in inventory). Lawler noted:

"As I’ve noted before, the inventory measure in most publicly-released local realtor/MLS reports excludes listings with pending contracts, but that is not the case for many of the reports sent to the NAR (referred to as the “NAR Report!”), Since the middle of last Spring inventory measures excluding pending listings have fallen much more sharply than inventory measures including such listings, and this latter inventory measure understates the decline in the effective inventory of homes for sale over the last several months."

It seems likely that active inventory is down close to 28% year-over-year.

Months-of-supply at 1.6 months is a new record low.

It is possible inventory will be up year-over-year sometime in 2022, but inventory will still be at very low levels.

Median House Price Growth Still Strong

On prices, the NAR reported:

The median existing-home price for all housing types in January was $350,300, up 15.4% from January 2021 ($303,600), as prices rose in each region. This marks 119 consecutive months of year-over-year increases, the longest-running streak on record.

Median prices are distorted by the mix (repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices).

The YoY change in the median price peaked at 23.6% in May and slowed to 12.6% in October (still very strong increase in prices). But has picked up a little again.

Finally, as usual, housing economist Tom Lawler's forecast was closer to the NAR report than the Consensus. The NAR reported 6.50 million SAAR, Lawler estimated the NAR would report 6.36 million SAAR, and the consensus was just 6.12 million SAAR.

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