US Housing Market January
Home sales across the US took a surprising upturn in January 2022 rising 6.7% from December which exceeded NAR’s forecast. It seems homebuyers are eager to lock in a lower mortgage rates now than risk much higher rates later.
Given the price of homes in some cities, waiting to buy a home could result in tens of thousands of dollars more in debt.
Sales were still down 2.3% from last January, however that is remarkable given housing supply is down 16.5% from last year this time.
It seems buyers are working harder to acquire a new home. There is only 1.6 months of supply in the housing market. That’s creating bidding wars and the challenge of trying to win one for buyers.
The median existing-home price has rocketed 15.4% over the last 12 months $350,300. Low affordability and rising rates at the lower price point, means more of this sales activity is happening in the pricey home segment. Sales above $1 million rose 39% year over year.
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Homes are selling lightning fast too, on the average of 19 day to contract, which is 2 days faster than last year. With rising mortgage rates, these stats may look different next month. NAR’s Lawrence Yun believes the high prices are due to property investors. Danielle Hale, NARs chief economist believes home sales will be strong throughout 2022. However, she is not sure how rising interest rates will reduce the demand for homes this spring and summer.
Home Price History & Trend
Housing Sales in January
Single-family house sales rose 6.5% year over (seasonally adjusted annual rate) to of 5.76 million in January, up 5.41 million in December. That was a drop of 2.4% from January of 2021. The median existing single-family house jumped 15.9% YoY to $357,100 in January.
In the US Northeast region, home sales increased 6.8% from December to January (780,000 homes), which as a 8.2% drop from January 2021. The median price for homes in the Northeast rose 6.0% to $382,800 from one year ago.
In the Midwest region, home sales rose 4.1% from December to a new annual rate of 1,510,000 in January, same as 12 months ago. The median price rose 7.8% to $245,900 vs January 2021.
And in the southern region, migrating buyers contributed to a rise of 9.3% in sales during January vs December, which was an increase of 0.3% from January 2021. The median home price in the South jumped 18.7% to $312,400 vs last January.
And in the Western region, existing-home sales grew 4.1% vs December to an annual rate of 1,270,000 in January. That is still down 6.6% from last January. The median price in the West rose 8.8% year over year to $505,800.
Condo Sales Stats
Condominium and co-op resales rose 8.8% to a new annual rate of 740,000 units in January (+8.8% from 680,000 the previous month, yet down 1.3% from January 2021. The median existing condo price rose 10.8% year over year to $297,800 last month.
New Home Construction Falls
Home constructions completions fell 5.2% across the US, in January to a seasonally adjusted annual rate of 1,246,000 homes. That was below the estimate of 1,315,000 completions, and is 6.2 percent below the rate of 1,328,000 12 months ago. Single‐family housing completions fell even further at a rate of 7.3% below the December construction rate of 1,000,000 homes.
New Home Construction Forecast
Building Permits for new homes rose .7% in January vs December to a rate of 1,899,000. Single‐family construction permits rose 6.8% in January above the December figure of 1,128,000 units.
New housing starts in January fell 4.1% to an adjusted annual rate of 1,638,000 from 1,708,000 starts the previous month. This was up 0.8 percent from January 2021’s 1,625,000 starts. Single‐family housing starts in January dropped 5.6% from December’s rate of 1,182,000.
Fannie Mae Homebuyer Sentiment
How do buyers and sellers feel about the current market? On the whole, not positive although Millennials seem to be the most hopeful. The Fannie Mae Home Purchase Sentiment Index® (HPSI) slid 2.4 points to 71.8 in January, it’s lowest level in 2 years.
Will We be Past the Pandemic by Spring?
Some major cities are regaining strength as workplaces reopen and the economy slowly progresses. With mortgage rates at almost record lows, the financial opportunity is still excellent for buyers. It will keep demand for homes high. With few listings, it’s a moot point. In some districts, new listings are growing, but new construction is falling. Most mortgage financing now is from investors and wealthy homeowners, but is well down for first time home buyers. In January, sales to first time buyers dropped by 3%.
If the Democrats should lose the 2022 and 2024 elections, housing market participants likely won’t be impacted. The Republicans would reopen the oil and gas energy sector which would make Colorado, Alaska, Texas, Montana and Louisiana boom again and lower energy prices would lower inflation and cost of living. And if they lower the taxes back down again, it would provide a rush of investment money back into the US.
So although we do speak of housing market downturns and stock market crashes, the economy has lots of potential and the long bull market may not be over by a long shot.
The Long Running Bull Market in Real Estate
Although the political players have changed since 2015, interest rates have dropped and Fed spending is like a tidal wave. Finance, sales, construction, materials, furniture, appliances, and more expenditures add up to big money expenditures. The housing market supported the economy during the recession.
And commercial real estate might recover in 2022 as well. With a return to the workplace and offices in big cities, retailers will see their revenues flow and investors see some profit finally. A jobs recovery will add to home prices.
Amid continuing worries of a bubble and crash, the predictions and outlook for the US housing market for the next 5 years are actually positive. If stimulus funds flow, the housing market should benefit greatly, although watch out for home prices in 2022. Expert predictions may be underestimating the return of demand for real estate as a home and an investment, growing wealth, and perhaps an end of land regulation if Republicans return to power in November of 2022. An end to land development regulation and NIMBY blockades could create a construction boom.
Real Estate May be the Very Best Investment Choice
The stock market vs housing market investment decision is another factor. If the stock market peaks and delivers weaker returns, money from equities could flow into real estate. It’s hard to beat real estate investment because land and buildings don’t just evaporate, they earn revenue, and they provide a tax haven.
Businesses are enjoying excellent earnings growth and stimulus from Biden’s infrastructure bill ensures that neither the housing market or stock market will begin to falter. Of course, there is much more to an economy than a government pouring money into it. Unforeseen circumstances might be the catalyst to bring severe corrections. But investors will be asking what is safer: stocks, Bitcoin, Gold, or good old fashioned real property.
Understanding the housing sector, what drives it, and what threatens and suppresses it are important insights. To grow the housing market, improve affordability, end homelessness, and ensure Millennials have a home to raise their young families, we need to understand who our opponents are in the housing arena. Pushing the gas pedal won’t work if someone else is applying a heavy foot on the brakes, and locking our steering wheel.
Stimulus Will Ensure Some Housing is Built, but Will it Raise Prices Too?
On the other hand, continued stimulus can’t help but power up an economy growing at a good clip and push jobs growth upward as well. The ceasing of pandemic unemployment benefits might create a ripple, but by spring of 2022, the market should be set for 5 years more of positive growth.
Zillow expects home prices to rise another 12.1% by end of July 2022.
Some experts believe this market has peaked, but $5 Trillion stimulus plus resurgent immigration has to accelerate it.
Are you buying blindly on the word of authority, without your own plan and strategy? Buyers should be as knowledgeable of market trends, stats, threats, and the key factors that will ensure the housing market and stock markets thrive in 2022 and the next 5 years.
The State of the Housing Market 2021
Harvard University’s yearly study on the state of the market in 2021. Let’s take a look at their findings as context for this years market and where this takes us in terms of demand, sales and prices next year.
The graphic below shows how home prices have risen predictably vs a backdrop of reduced housing availability. In fact, Harvard also calculated that real home prices are now at their highest levels ever.
And prices continuously rise, despite the current moderation, and home price to income ratio is up in dangerous territory similar to the record 2000’s before the stock market and house market crashes.
Sales of new homes have enjoyed a renaissance, however sales of existing homes via the mls has plummeted. New construction has suffered of late, however with the pandemic out of the way in spring in 2021, we’ll see a much better production of new homes.
Given current economic trajectories, summer 2022 should be a brisk period for sales, even if prices keep rising. It’ll be a return of home buyers and consumers feeling more confident and wages should be higher too.
Pace of new house construction brisk in 2021. Screenshot Courtesy of Harvard Universities study on the STATE OF THE NATION’S HOUSING 2021.
New Home Sales 2021
Unfortunately, most of the new construction has been in the single detached segment and not so much where it’s really needed in multifamily developments. Some of the blame for that is a lack of land available for multi-housing development near major cities.
Most of the construction and sales have occurred outside major metros in smaller cities.
Harvard reports sales jumped 53% in July, to 972,000 units at a seasonally adjusted annual rate. For 2020 as a whole, sales of new single-family homes were up 20.4 percent, to 822,000 units—the highest mark since 2006.
Inventory has actually fallen more to this point in September, so that makes buying prospects fairly bleak this fall.
You can see more on the latest stats for August on the housing market forecast post.
As a whole then, homes are as unaffordable and unavailable as they’ve ever been. It’s a huge problem that isn’t being addressed by state and Federal governments. However, Texas, Colorado, Florida and Idaho appear to be responding with growing housing offerings and a growing population.
Some locations have benefitted from the remote work trend, but in 2022, many big corporations will be pulling their employees back to the urban regions, particularly New York City and the Bay Area. That should moderate demand within what are now called the pandemic destination cities.
In terms of demographics, Harvard found that after living with parents in 2020, young adults have headed back out on their own. This will continue to happen and many of them will be looking to buy a home. Given rising interest rates that might happen by 2023, high down payment requirements, lack of affordable starter homes, and high prices, most will experience frustration with the home buying dream.
Since natural population growth and immigration slowed strongly in 2020, this has helped to keep home prices from exploding. Now the Covid pandemic passing, the rise in households will put the price pressure back on.
Before we get cynical about homeownership, Harvard found that the rate of owning a home in the US continues to rise.
Should You Sell Your House in 2022?
You might want to put your home up for sale any time between now and next August. 2023 is fraught with uncertainty.
See the forecasts and predictions for markets in Boston, Los Angeles, San Francisco and the Bay Area, New York, Miami, Houston, Seattle, and San Diego etc.
Check to view: Los Angeles home prices, Bay area home prices, New York home prices, Boston home prices, San Diego home prices, Denver home prices, Dallas home prices, Austin home prices, and Miami home prices.
Hottest Markets in the US Right Now:
Take note of the Dallas Fort Worth, Houston, Austin, Atlanta, Miami, Phoenix, Seattle, Tampa, Orlando, Denver, San Antonio, Las Vegas, and Nashville market data below courtesy of Realtor.com. This Sept 11th hotness index includes changes in listing prices and active listing growth. Boise City, Raleigh, Charlotte, Sarasota and others had astonishing losses of active listings. Austin and Tampa have seen the largest price changes in the last year and suffer from much lower active listings.
|Rank||Metro Region||Median Listing Price Change||Active Listing Growth YoY||Days on Market Change||New Listing Growth|
|1||new york-newark-jersey city, ny-nj-pa||-0.90%||-13.40%||-1||1.90%|
|2||los angeles-long beach-anaheim, ca||-2.00%||-20.90%||-1||-9.10%|
|4||dallas-fort worth-arlington, tx||10.00%||-34.00%||-10||-0.80%|
|7||houston-the woodlands-sugar land, tx||8.20%||-20.00%||-12||-0.20%|
|8||miami-fort lauderdale-west palm beach, fl||13.40%||-46.70%||-32||-15.90%|
|9||atlanta-sandy springs-roswell, ga||12.60%||-29.70%||-8||-14.20%|
|11||san francisco-oakland-hayward, ca||-4.90%||-17.90%||-5||31.80%|
|15||minneapolis-st. paul-bloomington, mn-wi||-1.00%||-8.60%||-1||2.40%|
|16||riverside-san bernardino-ontario, ca||16.70%||-2.00%||-6||2.00%|
|17||tampa-st. petersburg-clearwater, fl||22.70%||-38.90%||-14||-5.40%|
|18||san diego-carlsbad, ca||5.10%||0.10%||5||-8.80%|
|19||st. louis, mo-il||0.00%||-13.90%||-12||-3.70%|
|28||san antonio-new braunfels, tx||12.30%||-25.90%||-12||12.20%|
|30||kansas city, mo-ks||-4.40%||-2.20%||-7||10.80%|
|33||las vegas-henderson-paradise, nv||24.60%||-32.40%||-11||-8.60%|
|34||austin-round rock, tx||33.20%||-10.50%||-15||48.90%|
|36||san jose-sunnyvale-santa clara, ca||4.30%||-20.80%||-4||22.40%|
|37||virginia beach-norfolk-newport news, va-nc||-4.50%||-18.30%||-10||-14.40%|
|38||milwaukee-waukesha-west allis, wi||-15.40%||7.40%||-6||31.30%|
Here’s 8 Reasons Why People Are Still Eager to Buy Real Estate:
- home prices are appreciating and it’s a safe investment over the long term
- millennials need a home to raise their families
- rents are high giving property owners excellent ROI on rental properties
- flips of older properties continue to create amazing returns
- real property is less risky (unless you get over leveraged)
- the economy is steady or improving
Do the Underlying Economic Fundamentals Support Higher Home Prices?
Some think housing shortages will keep home prices high. However the economy is looking good and unemployment is headed much lower. This is a time when you can take changes to improve your life however, it’s wise to consider specifically where the real opportunities are. That might even include Real Estate Investing and investing in Rental Income Property.
Housing Market Forecast 2022/2023
Many first time homebuyers are looking ahead eagerly to 2022/2023, and are hoping the market might ease enough to allow them to buy a home. Yet the stats show fewer such buyers are buying and will be buying. Although Millennials have been good about saving, the down payment requirements are very high and we are edging closer to when the Fed will raise interest rates.
The Fed has indicated they won’t raise them until perhaps 2023. If this should happen, home prices will fall which could make it easier for buyers to purchase, however mortgage payments will be significantly higher.
Will 2022 Be Better?
- there will be more homes listed
- new construction will pick up
- mortgage rates will remain low
- competition for homes will ease off
- some sellers will find it easier to sell and move on with their lives
- the economy will grow creating better markets overall including real estate
- home price growth will moderate a little (estimates of 5.3% growth by NAR, and 12% by Zillow)
- multifamily construction will rise 5% to ease away some of the lower end buyers
Check out the report on investments in rental property if you’re planning to buy in cities such as Los Angeles, San Francisco, San Jose, Silicon Valley, New York, Miami, Oakland, Phoenix, Seattle, Denver etc. Buyers are still dreaming in California a good look at the San Diego Real estate market, and the Los Angeles real estate market as economic indicators, and a fresh look at mortgage rates. To be on the safe side, see this post on the likelihood of a US housing market crash in the years ahead. Looking to put your house up for sale in 2022? Find a Realtor now or discover how to sell home now at market value.
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Many Americans will soon be on their own without Fed assistance and facing back rent and overdue mortgages. Cities such as Denver, Dallas, Houston, San Antonio, Austin, Salt Lake City, Las Vegas, Tulsa, Seattle, Boston, New York, New Jersey, Chicago , San Antonio, Austin, Colorado Springs, Salt Lake City, an Los Angeles may see growth in listings.