For the third month in a row, existing home sales took a dive, according to the latest report from the National Association of Realtors.

Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, retreated 1.2% from December to a seasonally adjusted rate of 4.94 million in January. Furthermore, the report indicates sales are 8.5% below January 2018’s rate.

NAR Chief Economist Lawrence Yun said last month’s home sales of 4.94 million were the lowest since November 2015, but that he does not expect the numbers to decline further going forward.

“Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low,” Yun continued. “Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.”

The median existing home price for all housing types increased to $247,500 climbing 2.8% from last January’s rate of $240,800. This marks the 83rd straight month of year-over-year gains.

Notably, Yun notes that this median home price growth is the slowest since February 2012 and cautions that the figures do not yet tell the full story for the month of January.

“Lower mortgage rates from December 2018 had little impact on January sales, however, the lower rates will inevitably lead to more home sales,” Yun said.

Total housing available for sale increased from December, rising from 1.53 million existing homes on the market to 1.59 million in January. Fortunately, this is still up from last year’s total of 1.52 million.

Unsold inventory rests at a 3.9-month supply at the current sales pace, rising from last month’s total of 3.7 and January 2018’s total of 3.5 months.

Properties stayed on the market an average of 49 days in January, moving up from 46 days in December and 42 days in 2018. The report states that 38% of homes stayed on the market for less than a month.

Although inventory grew for the sixth consecutive month, Yun said the market is still suffering from an inventory shortage.

“In particular, the lower end of the market is experiencing a greater shortage, and more home construction is needed,” Yun said. “Taking steps to lower construction costs would be a tremendous help. Local zoning ordinances should also be reformed, while the housing permitting process must be expedited; these simple acts would immediately increase homeownership opportunities and boost local economies.”

The report states, the average commitment rate for a 30-year, conventional, fixed-rate mortgage fell from 4.64% the month prior to 4.46% in January and the average commitment rate for all of 2018 was 4.54%, according to Freddie Mac.

First-time buyers comprised 29% of sales in January, a decrease from 32% in December but the same rate in January of last year. NAR revealed that the annual share of first-time buyers held steady at 33%.

“Decelerated sales and the increases in inventory will work in favor of potential homebuyers, putting them in a better negotiating position heading into the spring months,” NAR President John Smaby said. “On top of that, low-interest rates will bring an additional $80 per month savings compared to the rates of just a few months ago.”

Single-family homes declined from a seasonally adjusted annual rate of 4.45million in December to 4.37 million in January 8.4% below 4.77 million a year ago. The median existing single-family home price was $249,000 in January, increasing 3.1% from January 2018. 

Existing condominium and co-op sales recorded a seasonally adjusted annual rate of 570,000 units in January, moving forwards 3.6% from December, but still down 9.5% from a year ago. The median existing condo price was $233,000 in January, slightly increasing 0.1% from 2018. 

Trulia Chief Economist Issi Romem said in downturns, home sales tend to fall ahead of housing prices.

“When sellers face increasing difficulty selling at current prices, days on market increase, for-sale inventory builds up and home sales plummet before price cuts and lower asking prices on new listings begin adjusting prices downwards,” Romem continued. “Although prices are still rising, they are doing so at a slower pace than before and we appear to be well along this path.

Existing home sales in the Northeast climbed 2.9% to an annual rate of 700,000 in January, which is 1.4% below a year ago. The median price in the Northeast increased 0.4% from January 2018 and came in at 270,000.

In the Midwest, existing-home sales decreased 2.5% from the prior month at an annual rate of 1.16 million and 7.9% below January 2018. The median price in the Midwest was $189,700, increasing 1.4% from this time last year.

Southern existing-home sales also fell, declining 1% to an annual rate of 2.08 million in January. This is down 8.4% from last year. The median price in the South rose to 214,800, increasing 2.5% from January 2018.

Existing home sales in the West declined 2.9% to an annual rate of 1 million in January, which is a whopping 13.8% below January 2018. The median price in the West was $374,600 increasing 2.9% from this time last year.

Realtor.com Chief Economist Danielle Hale said after a slow finish last year, January data shows continued cooling in existing home sales from December, and an 8.5% miss compared to last year’s sales pace.

“Lower mortgage rates should eventually spur additional home sales activity, and mortgage application data has more recently shown a pickup. Prices continue to rise, but at slower pace than 2018, up just 2.8% above last January. Even with mortgage rates roughly in line with 2018, higher home prices mean would-be buyers are likely to have affordability top of mind while navigating this year's spring housing market.”

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