Fueled by Low Mortgage Rates, Home Sales Are on Fire This Winter
Home sales in the U.S. slipped from December to January, but here's a more eye-popping statistic: Sales last month soared nearly 10% compared to January of 2019, the National Association of Realtors says.
Buyers armed with the lowest mortgage interest rates in years — in your area and all around the U.S. — are snapping up houses this year whenever they find something in their price range.
That's not always easy because in many places there aren't enough homes for sale, especially at the lower prices sought by first-time buyers. But the new data shows first-timers are flexing more muscle in the housing market.
Home sales make a 'strong start' to 2020
Home sales last month were up nearly 10% from a year ago.
U.S. sales of previously owned homes last month fell 1.3% from December — but January's sales were up a stunning 9.6% versus a year ago.
“Existing-home sales are off to a strong start" this year, says Lawrence Yun, chief economist for the National Association of Realtors.
As sales rise, so do prices. Last month's national median price for a home was $266,300, up 6.8% from a year earlier, when the median was $249,400.
"Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth," Yun said Friday, in a news release.
Rates have dropped to their best levels in years and are approaching all-time lows. Thirty-year fixed-rate mortgages are averaging 3.49%, according to mortgage company Freddie Mac, and that's not far from 2012's record low of 3.31%.
Supplies of homes are super tight
First-time homebuyers are finding houses to purchase, despite the challenges.
As for those "supply conditions," the Realtors' trade group says the number of U.S. homes on the market last month was the lowest for any January since 1999. But the hope is that supplies will improve as builders get building.
The Commerce Department reported earlier this week that housing starts last month skyrocketed 21.4% compared to the level of a year ago, and building permits were close to a 13-year high.
"The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales," Yun says.
Meanwhile, first-time homebuyers are managing to carve out a greater share of home sales, despite the challenges. Last month they were responsible for 32% of all home purchases, up from 31% in December.
"It is good to see first-time buyers slowly stepping into the market," says Yun. "The rise in the homeownership rate among the younger adults, under 35, and minority households means an increasing number of Americans can build wealth by owning real estate."
