January Data was expected to surprise some analysts - And it did, as inventory improved, a new January average sales price was set, and units sold slowed
There are three main components that need to be observed in the Existing Home Sales Report: Inventory, Units sold, and Average sales Price. It was projected in the January Existing Forecast Article that inventory should rise month to month and January to January to the Expect 1.58 million to 1.63 million unit Level. It was expected the higher inventory would push the units sold to between 313,000 and 324,000 units. A new January Record Average sales price was expected between $289,9000 and $294,900 with the outside chance of $296,000. What was reported by the REALTORS this January?
Inventory rebounded to 1.591 million units. This was within the expected range. It is still significantly lower than the January 2016 level of 1.65 million units and much lower than the 1.79 million we had during December 2015. Inventory rose 2.65% month to month and 4.67% January to January.
Units Sold disappointed, and was anticipated. The combination permutation table that was released with the forecast article had the possibility of 260,000 to 278,000 units sold, based on the normal month to month changes in units sold. It's cold, snowy, and football filled television during January. There were 285,000 units sold this January. This was still a better January than January 2008 through January 2015.
A New January Average Sales Price Record was set at $286,600. The average single family home sales price was $287,600 and the average condominium sold for $280,900. There has been some questions regarding the sustainability of 3.00% and higher appreciation and the effects on consumer prices (CPI.) The "inflation" this January was 1.49%.
The rolling year sales is coasting lower from year to year. This column uses the current year trend line and the rolling year data as a way to project future growth and explain the current data. The current year data is just one point right now. A line is made with two points, and the earliest that a trend can be determined is three points. The only thing that can be used with any clarity during the first few month of the year in the rolling year sales data. The rolling year data is down roughly 260,000 units from last January. This means that during the next year we could be down to the level of 4.5 million units. The "headline" value from the REALTORS was 4.370 million. This seems artificially low.
The existing home sales data has a multiplying effect. Home purchasers normally need lender, appraisers, movers and REALTORS. Home buyers need new furniture, new appliance, new home and garden material. The same can be said of home sellers.
The data was a little disappointing regarding units sold. Everything was within the range of expectations. Managed expectations are a necessity in real estate.Check with your local REALTORS regarding what is happening in your community, school district, neighborhood or condominium association, and your price range. The things that matter are condition, location, price and motivation of the buyer and the seller.
It's the economy.
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