U.S existing home sales decline 1.3% in January to 5.46 million units

The U.S National Association of Realtors announced the existing home sales report for January on Friday. The data suggested a considerable drop in home sales in the United States in January. The constraint fueled by the tight supply, as per the analysts, can ease in the upcoming months with under-construction homes and building permits posting a 13-year high.

The Association revealed existing home sales at 5.46 million units (seasonally adjusted annual rate) in January that marked a 1.3% decline. The revised data for December reported 5.53 million units instead of 5.54 million units that were reported previously. Analysts, however, were expecting an even steeper decline of 1.8% in the U.S existing home sales in January to 5.43 million units.

Existing Home Sales In West Saw A Sharp Decline

In terms of regions, existing home sales were reported to have increased in the Midwest and South in January. A sharp decline in West that is known as the most expensive region of the country, however, weighed on the monthly report. Sales in the Northeast were reported to have remained unchanged last month.

On a year over year basis, January’s data accentuated a 9.6% increase in existing home sales that account for around 90% of the total home sales in the United States.

Earlier in the week, the government’s data posted a 9.2% increase in building permits to its best reading since March 2007. Homes under construction, on the other hand, were recorded at a new high since February 2007.

Following three consecutive rate cuts from the U.S Federal Reserve in 2019, the lowest mortgage rates in over 3 years have helped fuel the housing market while playing an imperative role in the economic expansion (11^th year) that has been branded as the longest in history. The current monetary policy is deemed sufficient to counter the impact of the Coronavirus emergency in China that is weighing on business investment and consumer spending. The U.S Fed is unlikely to change the monetary policy in 2020.

Median Existing House Price Increased 6.8% In January

At 1.42 million, the U.S market had 10.7% less previously owned homes in January as compared to last year. The median price for an existing house was recorded at $266,300 that marked a 6.8% increase versus January 2019.

The data further highlighted that the current pace will require 3.1 months for the inventory to be exhausted while the figure was capped at a marginally lower 3 months in December. January’s 3.1 months pace is still significantly lower than 3.8 months posted last year.

U.S existing home sales failed to cast a considerable impact on the forex market as the U.S flash manufacturing and services PMI remained the major market mover on Friday.