Existing-home sales rose 3.3% in January to a seasonally adjusted annual rate of 5.69 million from an upward-revised rate of 5.51 million in December, according to the National Association of Realtors.
The category — which includes single-family homes, townhomes, condominiums and co-ops — was 3.8% ahead of the year-ago period in January and is at the most robust level since February 2007.
The median existing home sales price in January was $228,900, up 7.1% from a year ago and representing the 59th-straight month of year-over-year gains. Inventory dropped for the 20th month in a row, with unsold properties at a 3.6-month supply.
While industry observers had predicted a slowdown in 2017, an executive action by President Donald Trump could stand to cool existing home sales even more than initially expected. The order, suspending a recent 25-basis-point decrease in the Federal Housing Administration's mortgage insurance premium, could block as many as 40,000 homebuyers from entering the market this year. First-time buyers stand to bear the brunt of the action, as the group made up one-third of January's existing-home sales.
Despite a second-straight month of declines in builder confidence recorded by the National Association of Home Builders/Wells Fargo Housing Market Index, economists say the measure of builder optimism is moving back into a sustainable range on the back of strong housing market fundamentals. Still, the National Association of Home Builders has cited concerns pertaining to the labor shortage, insufficient lot supply and high material and labor costs as a contributor to higher home prices.
New construction could ease tight inventory and deflate prices for buyers trying to enter the market, but January's housing starts were pulled down by volatility in the multifamily category. Still, the market saw an uptick in single-family housing starts and building permit authorizations that could bode well for construction in the coming months.
For more housing news, sign up for our daily residential construction newsletter.