Existing-home sales came up short in January, at their lowest in more than three years, the National Association of REALTORS® (NAR) reports.
Contract closings fell 3.2 percent, while the median sales price increased 5.8 percent to $240,500.
The housing market is slowing, and pressures will only build as the year goes on.
While sales were down, prices were up.
At the end of January, total US housing inventory climbed to 1.52 million existing homes available for sale, a 4.1 percent increase from the previous month, yet it remains 9.5 percent below last year's supply of 1.68 million homes.
The January rate is a 4.8% decrease from the same month a year ago. The total supply of homes for sale fell to 1.52 million last month, the fewest for any January since record keeping began in 1999. Realtors are reporting an increase in potential buyers over a year ago, but sales didn't keep 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", Lawrence Yun, chief economist for the national Realtors, said in a news release.
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"Another month of solid price gains underlines this ongoing trend of strong demand and weak supply", Yun says. In central OH, the average sale price was almost 206 thousand dollars, up 5.8 percent from January of 2017.
Inventory is now at a 3.4-month supply. There now is a 3.4-month supply of inventory compared to January 2017's 3.6 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; however, there's hope that the tide is finally turning".
January's drop in existing home sales seems to be a payback for the strength evident early in the fourth quarter, when demand was likely artificially boosted by expectations among buyers for reduced mortgage deductions at the start of 2018.
"If inventory conditions can improve enough to cool the swift price growth in several markets, most prospective buyers should be able to absorb the higher borrowing costs", he said.
The average commitment rate for a 30-year conventional, fixed rate mortgage rose to 4.03 percent in January from 3.95 percent in December, according to Freddie Mac.
Twenty-two percent of existing-home sales in January were all-cash, with 17 percent by individual investors. Economists often describe a "balanced" market as one with five to seven months worth of inventory.