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West Hawaii Real Estate | March 2, 2018 5
Existing-home sales slip 3.2 percent in January
Existing-home sales slumped
for the second consecutive
month in January and experienced
their largest decline on
an annual basis in over three years,
according to the National Association
of Realtors. All major regions saw
monthly and annual sales declines
last month.
Total existing-home sales, which
are completed transactions that
include single-family homes, townhomes,
condominiums and co-ops,
sank 3.2 percent in January to a seasonally
adjusted annual rate of 5.38
million from a downwardly revised
5.56 million in December 2017. After
last month’s decline, sales are 4.8
percent below a year ago (largest
annual decline since August 2014 at
5.5 percent) and at their slowest pace
since last September (5.37 million).
Lawrence Yun, NAR chief economist,
says January’s retreat in closings
highlights the housing market’s glaring
inventory shortage to start 2018.
“The utter lack of sufficient housing
supply and its influence on higher
home prices muted overall sales activity
in much of the U.S. last month,”
he said. “While the good news is
that Realtors in most areas are saying
buyer traffic is even stronger than the
beginning of last year, sales failed
to follow course and far lagged last
January’s pace. It’s very clear that too
many markets right now are becoming
less affordable and desperately
need more new listings to calm the
speedy price growth.”
The median existing-home price
for all housing types in January was
$240,500, up 5.8 percent from January
2017 ($227,300). January’s price increase
marks the 71st straight month
of year-over-year gains.
Total housing inventory at the
end of January rose 4.1 percent to
1.52 million existing homes available
for sale, but is still 9.5 percent lower
than a year ago (1.68 million) and has
fallen year-over-year for 32 consecutive
months. Unsold inventory is at a
3.4-month supply at the current sales
pace (3.6 months a year ago).
“Another month of solid price
gains underlines this ongoing trend
of strong demand and weak supply.
The underproduction of singlefamily
homes over the last decade has
played a predominant role in the current
inventory crisis that is weighing
on affordability,” said Yun. “However,
there’s hope that the tide is finally
turning. There was a nice jump in
new home construction in January
and homebuilder confidence is high.
These two factors will hopefully lay
the foundation for the building industry
to meaningfully ramp up production
as this year progresses.”
First-time buyers were 29 percent
of sales in January, which is down
from 32 percent in December 2017
and 33 percent a year ago. NAR’s
2017 Profile of Home Buyers and Sellers
– released in late 20175 – revealed
that the annual share of first-time
buyers was 34 percent.
According to Freddie Mac, the
average commitment rate (link is
external) for a 30-year, conventional,
fixed-rate mortgage moved higher
for the fourth straight
month to 4.03 percent
in January from 3.95
percent in December.
The average commitment
rate for all of
2017 was 3.99 percent.
“The gradual uptick
in wages over the last
few months is a promising
development for the housing
market, but there’s risk these income
gains could be offset by the recent
jump in mortgage rates,” said Yun.
“That is why the pace of added new
and existing supply in the months
ahead is worth monitoring. If inventory
conditions can improve enough
to cool the swift price growth in several
markets, most prospective buyers
should be able to absorb the higher
borrowing costs.”
Properties typically stayed on the
market for 42 days in January, which
is up from 40 days in December 2017
but down from a year ago (50 days).
Forty-three percent of homes sold in
January were on the market for less
than a month.
“While the good news is that Realtors in most areas are saying buyer traffic is
even stronger than the beginning of last year, sales failed to follow course and
far lagged last January’s pace. It’s very clear that too many markets right now
are becoming less affordable and desperately need more new listings to calm
the speedy price growth.” - Lawrence Yun, NAR Chief Economist
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