NAR: Existing-Home Sales Decreased to 4.00 million SAAR in January

Median Prices Down 13.2% from Peak in June 2022

From the NAR: Existing-Home Sales Descended 0.7% in January

Existing-home sales fell for the twelfth straight month in January, according to the National Association of Realtors®. Month-over-month sales were mixed among the four major U.S. regions, as the South and West registered increases, while the East and Midwest experienced declines. All regions recorded year-over-year declines.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops – slid 0.7% from December 2022 to a seasonally adjusted annual rate of 4.00 million in January. Year-over-year, sales retreated 36.9% (down from 6.34 million in January 2022).
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Total housing inventory registered at the end of January was 980,000 units, up 2.1% from December and 15.3% from one year ago (850,000). Unsold inventory sits at a 2.9-month supply at the current sales pace, unchanged from December but up from 1.6 months in January 2022.
emphasis added

The sales rate was below the consensus forecast (due to the change in seasonal factors).

Sales in January (4.00 million SAAR) were down 0.7% from the previous month and were 36.9% below the January 2022 sales rate. Sales were just below the pandemic low of 4.01 million SAAR. This was the lowest sales rate since 2010.

Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The second graph shows existing home sales by month for 2022 and 2023.

Sales declined 36.9% year-over-year compared to January 2022. This was the seventeenth consecutive month with sales down year-over-year.

The third graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), for a few selected periods. Black and light Purple are the maximum sales per month during the bubble (2005) and the minimum sales during the bust (2008 - 2011). The most recent five years are shown (2019 through 2023).

Sales NSA in January (231,000) were 34.4% below sales in January 2022 (352,000). On an NSA basis, sales were the lowest for January since 2009, and sales were only 6.0% above the record low for January in 2009.

This decrease in sales, NSA, was similar to change in the markets I track each month.

Housing Inventory Increased in January

The fourth graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 0.99 million in January from 0.96 million in December.

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 was up 15.3% year-over-year (blue) in January compared to January 2022. This includes some pending sales - and doesn’t match some other measures - and it seems likely that active inventory was up year-over-year much more in January than the NAR is reporting.

Months of supply (red) was unchanged at 2.9 months in January from 2.9 months in December.

Median House Prices

On prices, the NAR reported:

The median existing-home price3 for all housing types in January was $359,000, an increase of 1.3% from January 2022 ($354,300), as prices climbed in three out of four U.S. regions while falling in the West. This marks 131 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 25.2% in May 2021 and has now slowed to 1.3%. Note that the median price usually starts falling seasonally in July, so the 2.0% decline in January in the median price was partially seasonal, however the 13.2% decline in the median price over the last seven months has been much larger than the usual seasonal decline.

It is likely the median price will be down year-over-year soon - and the Case-Shiller index will follow.

Existing home sales are reported when the sale closes. So, sales in January were mostly for contracts signed in November and December when mortgage rates had come off the peak in October. Sales are likely near a bottom but might fall further since mortgage rates have increased recently.

Note: January is usually one of the slowest months for closed sales. The reason the seasonally adjusted sales rate was below the consensus forecast was due to a change in the seasonal factors. January 2022 was revised down (due to factor changes) to 6.34 million from 6.49 million. Without the change in seasonal factors, the sales rate would have been above the consensus forecast.