In January, the sales of previously owned homes rose 6.7% from December. The rate of this would be 6.5 million units annually according to the National Association of Realtors. Comparatively, the sales in January of last year were 2.3% greater than they are currently. Despite the sales increasing, the supply of homes has hit a record low of only 860,000 homes for sale at the end of January. This is a decrease of 16.5% from the previous January. At the current rate, it would only take 1.6 months to exhaust the entire inventory of houses in the market. This rate is much faster than normal with houses typically selling after around 19 days on the market. Houses that are newly built are also being sold at a much higher rate with a 12% jump from December to January. Unfortunately, builders cannot keep up with this demand due to supply chain and labor issues. In the overall economy, this likely means that interest rates are decreasing due to people making investments into expensive things such as houses.
January home sales jump 6.7% despite a record low supply (cnbc.com)
Wow, I did not expect increase in home sales. According to the basic rule in economic, it would lead to increase in home prices. However, it means that people have money. Consumption is increasing and businesses earn money. However, it may lead to higher interest rates.
ReplyDeleteIt is interesting that home sales have continued to increase throughout the pandemic, even though there is currently a shortage of available homes. Because of the shortage, house prices have increased dramatically in the last few years, and will continue to increase until more homes become available for people to buy. This continued increase may cause sales to decrease over time though, since many people won't be able to afford to buy homes anymore, which would then cause the price to eventually decrease.
ReplyDeleteCOVID is a big contributor to the rise in home sales. COVID economic plans the last two years have been very expansionary and have caused inflation and the money supply to rise at alarming rates. Consumers see more money and decide to increase their consumption which has led to an increase in home sales. It will be interesting to see what happens to the housing market when the government announces its first big contractionary policy of 2022.
ReplyDeleteThis will be interesting to watch as here is another industry is being affected with the issues with the supply chain. This has caused in increase in prices of new homes, which has caused an increase in price of existing homes as well. People in the market for a new house may have to settle for an existing house until this issue is fixed.
ReplyDeleteWhile interest rates are still relatively low, I believe we will continue to see a high demand for new homes. With supply of new homes low, we can continue to expect high prices due to the demand. I don't think that we will see a decline in prices until supply chain issues are resolved. Until then we can continue to expect housing prices to increase.
ReplyDeleteI find it surprising that there was in increase in housing sales since housing is really expensive. Since there is a high demand and low supply, the pricing for housing is high, which is why I was shocked to see an increase in sales.
ReplyDeleteThis is indeed suspicious, as there were high sales even during low employment, and more importantly a smaller labor force. My friend and I theorized a housing bubble in December. We should wait and watch how this unfolds.
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