Last week the National Association of Realtors released their Existing Home Sales report, which measures closings on existing homes, for the month of January. It showed that sales were up 6.7% which came in much stronger than expectations of a 4% drop. Year over year, sales were down 2.3%, but this is still a great number in spite of higher mortgage interest rates, higher home prices, and very low housing inventory levels. In regards to inventory, there were only 860,000 homes for sale in January, which was a new record low and down from last month’s report which was at 911,000. Housing inventory is now down 16% from a year ago! The inventory picture is completely different from 2007 when there were “bubble” conditions, for instance, in 2007 there were 3.7 million available homes for sale versus again only 860k. Also, in this report, we saw that with such tight inventory levels, listed homes sat on the market, on average, for only 19 days! This is very supportive of home pricing.
Speaking of home prices, the Case Shiller Home Price index was released last week and it showed that home prices rose 0.9% in the month of December and 18.8% year over year. The top three highest appreciation levels across the U.S. were Phoenix at 33%, Tampa at 29%, and Miami at 27%. Even the lowest levels of appreciation were still around 11% and that was found in Chicago, Washington, and Minneapolis.
This high level of home appreciation is created because of the dynamics of the market where we have very low levels of inventory and very high levels of homeowner demand. And, it is continuing in the face of increasing mortgage interest rates.
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By: Jon Iacono