With record low mortgage rates encouraging an atypically high volume of home sales for the time of year, 2021 opened with indicators for another strong year, according to Remax.
But constraints remain: the number of for-sale properties fell to the lowest point since Remax started its National Housing Report in 2007, setting up high demand and potentially limiting future sales volumes. January inventory dropped 12.1% month-over-month and 35.7% year-over-year. The national supply decreased to 1.7 months from 1.8 months in December and 3.5 months the year prior.
Among the 53 largest metro areas, Albuquerque, N.M., and Boise, Idaho, tied for the lowest supply for the second straight month at 0.5 months. Denver, Phoenix, Salt Lake City and Seattle followed in a tie at 0.6 months. A 6-month supply defines market equilibrium.
While time on market rose to a 40-day average from the record low December of 37 days, it dropped from 59 days year-over-year. Omaha, Neb., continued to have the fewest days on market at 18, followed by Boise at 19 and a tie for third with Cincinnati and Nashville, Tenn., at 21. The slowest times came in Des Moines, Iowa, at 99 days, Miami at 88 and Augusta, Maine at 78.
Similarly, the median sales price dipped 1.7% monthly to $285,000 from $290,000 but that represents an annual growth of 11.8%. None of the largest 53 housing markets declined in sales price year-over-year. Meanwhile, Boise led all metros with a 24.3% jump from January 2020, trailed closely by 21.3% in Pittsburgh and 20.5% in Indianapolis.
“January home sales started the year off with a bang despite the current shortage of homes for sale. It signals that 2021 could be a historically good year for housing,” Adam Contos, CEO of Remax Holdings, said in the report.
Closed sales in January fell 32.1% from December, but the volume reflected a 13.5% increase from the year earlier. San Francisco outpaced the country with a 38.5% annual spike in sales, followed by Anchorage, Alaska at 31.7%, and the Wilmington-Dover, Del., combined statistical area at 30.9%.
Interest rates continue to stoke consumer demand. The average 30-year FRM on closed loans fell to 2.88% in January from 2.93% in December and 3.96% annually, according to ICE Mortgage Technology’s Origination Insight Report.
The split in loan types leaned two-thirds toward refinance versus purchase. The refi share grew from 60% in December and 50% in January 2020 as more borrowers take advantage of the sub-3% rates. While a shift toward a more purchase-oriented market is expected for later in 2021, the latest application data from the week ending Feb. 12 shows consumers are still refinancing in droves.
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