Sales Were at the Weakest Pace Since 2010

• Sales of existing homes fell 0.7% to 4.00 million annualized units in January from the prior month.
• Total housing inventory at the end of January was 980,000 units, up 15.3% from a year ago.
• Sales of existing homes were down on a year-over-year basis in each of the four major U.S. regions.

Sales of existing homes fell 0.7% in January to 4.00 million annualized units, the slowest pace since 2010, from 4.03 million in the prior month, according to the National Association of Realtors. This means 4.00 million units would be sold in 2023 if sales were at the same pace as they were in January. Sales fell on the month in the Northeast and Midwest while sales increased in the South and West. Sales were down on a year-over-year basis in each of the four major regions for the twelfth straight month. 

The median existing-home price for all housing types was $359,000, up 1.3% from January 2022 ($354,300). The median existing single-family home price was $363,100, up 0.7% from January 2022. The median existing condo price was $320,000, an annual increase of 5.2%. The months’ supply of existing homes for sale was 2.9 months in January at the current sales pace, unchanged from December but up from 1.6 months in January 2022. Properties typically remained on the market for 33 days in January, up from 26 days in December and 19 days in January 2022. 

Existing-home sales declined for the twelfth consecutive month as high mortgage rates and deteriorating affordability continued to weigh on housing activity. Housing inventory was low coming into the pandemic after many years of underbuilding following the Great Recession. But homebuilders have grappled with inflation, supply-chain disruptions, and labor constraints, putting downward pressure on the inventory of unsold existing homes. To fight inflation, the Fed embarked on an aggressive monetary policy cycle in March 2022, sending mortgage rates to the highest level since 2000. With the U.S. economy starting 2023 stronger than expected, the Fed will likely raise the fed funds rate higher than previously expected to tame inflation. Economic activity will likely slow significantly this year as interest rates increase and financial conditions tighten further. PNC forecasts a recession in the second half of 2023 as the drag from higher interest rates weighs on economic activity, with further deterioration in the housing market.