Despite the fact that mortgage rates have been decreasing, home sales have slowed in the month of January 2020 (from December 2019). While most economists expected existing-home sales to decrease by 2% in January, the actual number was 1.3% (5.46 million homes). It is important to note that home sales are up 9.6% from January 2019; the market is doing well. Ultimately, low inventory represents the primary cause for the “slowdown.”
The issue of inventory is evidenced by the fact that in January 2020 there was a 3.1-month supply of homes, while January 2019 saw a 3.8-month supply of homes. Further, when supply is low and demand is high, you generally see an increase in median sales price; here, median sales price has increased by 6.8% to $266,300.00.
This is not to say that the sky is falling, the housing market is still significantly stronger than the same time last year. Moreover, signaling that the inventory issue may resolve soon, is that residential permits rose by 9.2% from December 2019 reaching a 13-year high. The importance of building permits should be apparent: more permits means more building projects. More building projects means more homes. Moreover, home-builder confidence remains at an almost 20-year high.
The market is “slowing,” but is still performing incredibly well. Things are looking up for the housing market in general.
At the Chernov Team we understand that knowledge is power, and knowledge of how the market is behaving is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.