US existing-home sales in January rose more than expected to their highest level in nearly a decade, according to the National Association of Realtors.
Sales of existing condos, co-ops, townhomes, and single-family houses increased by 3.3%, at a seasonally adjusted annual rate of 5.69 million, the highest since February 2007. Economists had estimated that sales rose 1.1%, at a rate of 5.55 million, according to Bloomberg.
Sales in December were revised higher.
The data, like other data on the housing market, is quite volatile from month to month and tends to be revised often. Still, it continues to expose a shortfall in housing inventory that has contributed to price increases.
“Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate and deteriorating affordability conditions,” said Lawrence Yun, the NAR chief economist.
In January, inventory fell year-on-year for a 20th straight month, to a 3.6-month supply at the pace of sales. The median price of homes rose year-on-year for a 59th straight month, by 7.1%, to $US228,900.
Rising interest rates present another challenge for the housing market. Homeowners, who are accustomed to an environment of falling rates, may be reluctant to list their homes so they can retain the lower rates they locked in and avoid the costs associated with selling.
However, builder confidence has increased since the November election, meaning the shortfall of inventory could start correcting. Lighter regulations under the new administration could also make it easier for prospective homebuyers to get mortgages.
“Thus far, we have little concrete evidence regarding which of these forces is stronger,” Michelle Meyer, a US economist at Bank of America Merrill Lynch, said in a note on Wednesday.