Lack of inventory causes home sales in the US to slump at start of 2018
Existing home sales slumped in the United States for a second month in a row in January, the largest annual decline for three years, the latest index data reveals.
All major regions saw monthly and annual sales declines with transactions down by 3.2%, according to the report from the National Association of Realtors. The data also showed that sales are 4.8% below a year ago.
The median price for all housing types in January was $240,500, up 5.8% from January 2017 and it was the 71st month on a row of prices rising year on year.
A shortage of supply is behind the sales slump, according to NAR chief economist Lawrence Yun. ‘The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the US 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,’ he explained.
‘Another month of solid price gains underlines this ongoing trend of strong demand and weak supply. The underproduction of single family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability,’ Yun pointed out.
He added that there is hope that the supply situation could start easing as there was a rise in new home construction in January and home builder confidence is high. ‘These two factors will hopefully lay the foundation for the building industry to meaningfully ramp up production as this year progresses,’ he added.
A breakdown of the figures show that sales in the Northeast fell by 1.4% and are now 7.6% below a year ago. The median price was $269,100, some 6.8% above January 2017, while in the Midwest sales were down by 0.6% and 3.8% below a year ago at a median price of $188,000, up 8.7% year on year.
Sales in the South decreased 1.3% and are 1.7% lower than a year ago with a median price of $208,200, up 4.3% year on year while in the West sales fell 5% and are 9.5% below a year ago at a median price of $362,600, up 8% from January 2017.