Existing home sales rose in January from an upward revision in December as buyers take advantage of a dip in interest rates down to 6.75% from 7.94% but now back up to 7.16%.
Existing-Home Sales Chart Notes
- There is a delay in the data today from the St. Louis Fed, so I entered many months from other sources. The NAR revised December from 3.78 million to 3.88 million.
- Charts in this post subject to revision. I have requested a data update from the St. Louis Fed.
The National Association of Realtors reports Existing-Home Sales Rose 3.1% in January.
Existing-Home Highlights
- Existing-home sales expanded 3.1% in January to a seasonally adjusted annual rate of 4.00 million. Sales declined 1.7% from the prior year.
- The median existing-home sales price climbed 5.1% from January 2023 to $379,100 – the seventh consecutive month of year-over-year price gains.
- Total housing inventory registered at the end of January was 1.01 million units, up 2.0% from December and 3.1% from one year ago (980,000). Unsold inventory sits at a 3.0-month supply at the current sales pace, down from 3.1 months in December but up from 2.9 months in January 2023.
Existing-Home Sales Seasonally Adjusted
Existing-Home Sales Supply
Existing-Home Sales Long Term
Transaction Crash
- Existing home sales have crashed to a level seen in the late 1970s.
- Population-adjusted this is an enormous transaction crash, but not a price crash.
Comments of the Day
“The median home price reached an all-time high for the month of January. Multiple offers are common on mid-priced homes, and many homes were still sold within a month.”
“The elevated share of cash deals – 32% – indicated a market full of multiple offers and propelled by record-high housing wealth.” NAR Chief Economist Lawrence Yun
Median Price All-Time High
Median prices are at an all-time high. Lovely.
The Fed is concerned about this as it should be. However, the Fed itself is to blame.
Fed Minutes Show Concern Over Asset Prices, Housing, and Leverage
Yesterday, the Fed released minutes of the January FOMC meeting. The minutes showed four notable things.
Four Notable Things
- System’s financial vulnerabilities are notable
- Asset valuation pressures remained notable
- Insurers had been increasing their investments in risky corporate debt. Funding risks were also characterized as notable.
- Leverage in the financial sector was characterized as notable.
For more details and discussion please see Fed Minutes Show Concern Over Asset Prices, Housing, and Leverage
Importantly, we have notable financial leverage and notable asset valuation pressures.
Yun’s bragging ties straight into several recent posts of mine.
The Fed’s Big Problem, There Are Two Economies But Only One Interest Rate
On average, the economy looks OK. But averages are misleading. Several large groups of people are struggling. They all have one thing in common.
Who’s Unhappy?
Those looking to buy a home but cannot afford the record high prices, are not faring well in this economy.
The last great time to buy a home was in 2012. Over the next eight years, home prices moved further and further away from wages.
When the Covid pandemic hit in 2020, we had record QE, record fiscal stimulus, mortgage rates hit record lows, and inflation hit the highest levels in 40 years.
In response, home prices soared out of sight. Worse yet, the price of rent rose at least 0.4 percent for 28 straight months.
For discussion and 9 additional charts, please see The Fed’s Big Problem, There Are Two Economies But Only One Interest Rate
Gaaaaah!! Larry Yun again, talking his book. Wait for the NAR to trot out that shill from Florida, Sean Snaith again. They will put a fresh coat of paint on that Village Idiot and send him out to convince everyone that buying at an all- time price peak is a smart financial decision. Realtors lost all credibility during the last Housing Bubble.
What a freaking mess, our housing market. NO ONE can afford these MILLION DOLLAR SHACKS.
You sound like someone that failed to buy Bitcoin and US stocks ten or fifteen years ago. And, yes it really sucks.
Bernanke, pg. 287 in his book “The Courage to Act”, “Lower long-term rates also tend to raise ASSET prices, including HOUSE and stock prices, which, by making people feel wealthier, tends to stimulate consumer spending-the “wealth effect”.
Should have been “Lower long-term rates tend to encourage rampant speculation.”.
I worked as a carpenter in Grand County, Colorado between undergrad and grad school for 5 years in the 1970s. The government was always procyclical instead of counter cyclical, where they should have been. Boom to bust, bust to boom. In the recession in the early 70s there was 50 percent unempoyment in construction. Well, it was off to grad school. Thank you Gerald Ford.
Grad school is always a good strategy to avoid menial work for a while.
re: “the Fed itself is to blame”
Bernanke bankrupt half the home builders creating a housing shortage that still exists.
And QE stoked asset prices by lowering the real rate of interest for saver-holders.
Who are the buyers? I heard big companies buying
Check out Invitation Homes Inc
And instead of allowing the market to organically correct, FHA is extending all of the COVID mitigation programs, and adding a new one for owners in arrears, reducing their payments by up to 25%. Doing everything they can to keep the bubble inflated pre election. Disgusting.
I have many words much more accurate than “disgusting” but I will not offend the good folks present here.
Money laundering via real estate is the number 1 way to clean cash.
Inflation is here to STAY, where would it go anyWAY….It rhymes, don t it ?