Home sales rise


Sales of Existing U.S. Homes Rise to Second-Highest Since 2007

Sales of previously owned U.S. homes unexpectedly rose in January to the second-highest pace since early 2007, indicating the industry will keep prospering.

The January sales pace was the second-strongest since February 2007.

Compared with a year earlier, purchases increased 7.5 percent in January before adjusting for seasonal variations.

Supply of Homes

Prices have been driven higher because of a lean supply of available houses. The number of previously owned homes for sale fell 2.2 percent from January 2015, to 1.82 million.

At the current sales pace, it would take 4 months to sell those houses, compared with 3.9 months at the end of the prior month. Less than a five months’ supply is considered a tight market, the Realtors group has said.

“It remains to be seen whether we get sufficient inventory increases or whether the market will be choked by a lack of supply,” Lawrence Yun, NAR’s chief economist, told reporters as the figures were released. “We can’t stimulate more housing demand, we need to stimulate housing supply. Prices are rising way too fast.”

First-time Buyers

First-time buyers accounted for 32 percent of all purchases, up from 28 percent in January 2015 and matching the December share that was the highest since July 2012, the NAR said.

The number of properties available has remained fairly lean and a Commerce Department report last week showing a drop in new construction starts offered little hope for an immediate rebound in construction.

Home Construction

Residential starts decreased 3.8 percent to a three-month low 1.1 million annualized rate.

Budding wage growth and unemployment at an eight-year low of 4.9 percent in January are conducive to more home sales. Hourly earnings rose more than estimated last month after climbing in the year to December by the most since July 2009.

There seems to be a supply problem in the housing market. I think this news bodes well for LGIH.



Thanks Kevin, that’s a very useful post.



Thanks, Kevin. Just so people don’t get carried away, in real estate it’s about location, location, location. National sales figures don’t mean much. An investor will want to look at the local markets. For LGIH, look at the local market (down to the specific neighborhood or development) in which LGIH sells.