National Association of Realtors economist Lawrence Yun

WASHINGTON, DC—An uptick in housing starts last month couldn't do much to stem the biggest annual decline in existing-home sales in more than three years. The National Association of Realtors' Lawrence Yun attributed the decline in part to a shortage of inventory putting upward pressure on pricing, including that of for-sale apartments.

“The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the US last month,” says Yun, chief economist with NAR. “While the good news is that realtors in most areas are saying buyer traffic is even stronger than the beginning of last year, sales failed to follow course and far lagged last January's pace. It's very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”

Sales of single-family homes, townhomes, co-ops and condominiums were off 3.2% overall from December's downwardly adjusted rate to a seasonally adjusted annual rate of 5.38 million. Although co-ops and condos posted a 1.6% increase over December 2017, they're still 4.6% below year-ago levels. Compared to a year ago, total sales are off 4.8%, representing the largest annual decline since August 2014's 5.5% drop and the slowest pace since last September, when they reached an SAAR of 5.37 million units.

At the same time, median pricing across all product types was up 5.8% year over year in January to $240,500, representing the 71st consecutive month of pricing gains. Conversely, inventory of product for sale has now declined for 32 consecutive months.

“The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability,” says Yun. “However, there's hope that the tide is finally turning. There was a nice jump in new home construction in January and homebuilder confidence is high. These two factors will hopefully lay the foundation for the building industry to meaningfully ramp up production as this year progresses.”

Instant Insights /

Product Shortage Blunts Existing-Home Sales

Related Stories

Recommended For You