WASHINGTON (AP) — U.S. home sales crept upward in January, a sign that demand for housing remains strong amid signs of slower growth across the broader economy.
But buyers face a dilemma: The number of listings on the market has fallen, giving them fewer choices and pushing prices up quickly.
Sales of existing homes rose 0.4 percent last month to a seasonally adjusted annual rate of 5.47 million, the National Association of Realtors said Tuesday. The gains build on a strong 2015 when sales reached their highest level in nine years. Last year ended with a 12.1 percent surge in December sales, as new regulations had delayed closings in November.
However, in the Charlotte region, home sales fell a whopping 32.2 percent in January from December, with just 2,039 properties sold compared with 3,007, according to data from the Charlotte Regional Realtor Association. Year over year, home sales in the Charlotte area fell 10.6 percent in January.
Inventory in the Charlotte area remains at a historic low, with just a 3.0-month supply of available homes on the market, according to the CRRA. Supply was even lower in Mecklenburg County, down 37 percent to a 1.9-month supply in January from a 3.0-month supply a year earlier. The city of Charlotte, meanwhile, had a mere 1.8-month supply, compared with a 2.9-month stock in January 2015. A six-month supply is considered a balanced market.
For-sale inventory in the Carolina Multiple Listing Services dropped to 10,350 properties in January from 13,607 a year ago, when the region had a 4.4-month supply.
Nationally, real estate enters 2016 at a crossroads: Job growth and low mortgage rates have fueled demand and boosted home sales to levels last glimpsed in the waning months of the housing bubble that triggered the Great Recession. Yet fewer homes are available to purchase, causing price growth to eclipse wage grains and capping the potential for sales to rise further.
The median home sales price was $213,800 in January, an 8.2 percent annual increase from a year ago. In the Charlotte region, it was $179,500 in January, up 7.8 percent from a year ago.
Driving those price increases are an absence of choices for buyers. The number of listings on the market nationally in January fell 2.2 percent from a year ago. In Charlotte, it fell by 23.9 percent.
Buyers are also competing against investors. The share of purchases going to investors in January was 17 percent, up from 15 percent in the prior month. Purchases increased in the Northeast and Midwest, but stayed unchanged in the South and fell in the South.
In Charlotte, which a couple of years ago was one of the nation’s hottest markets for institutional investors, such purchases have fallen to 4.4 percent of all homes in the metropolitan statistical area, from 10.4 percent in 2014 and 12.1 percent in 2013, according to real estate data provider RealtyTrac.
Many homeowners are reluctant to sell, as they’re enjoying savings from low mortgage rates and lack enough equity to comfortably upgrade to another house.
The consequence is that would-be buyers face more competition when bidding on homes — and rising prices.
“So far sales have been bulletproof to price increases, but this is unsustainable in a slowly growing economy unless inventory improves,” said Nela Richardson, chief economist at the real estate brokerage Redfin.
The affordability pressures are showing up in mortgage down payments. As a percentage of the purchase price, down payment levels fell slightly in the closing months of 2015, according to LendingTree, an online lender. But down payments increased in absolute terms to an average of $51,721 in the final three months of the year from $48,924 in the prior quarter.
Hiring has buttressed sales. Employers have added 2.67 million jobs in the past year, and the unemployment rate has fallen to 4.9 percent. Pay growth has been less robust, although it has shown recent signs of accelerating with a 2.5 percent increase from a year ago to an average of $25.39 an hour.
It remains to be seen whether the pace of job growth will endure amid signs that growth has come close to stalling. The slowdown in China and turmoil in emerging economies such as Brazil and Russia kicked off a decline in commodity prices such as oil, which then seeped into falling U.S. stock prices and a dollar that risen in value to levels that hurt exports.
But the global chaos may have temporarily helped U.S. real estate. As investors parked their money in 10-year U.S. Treasury notes, the cost of borrowing dropped for both the government and homebuyers.
Mortgage buyer Freddie Mac says the average rate on a 30-year, fixed-rate mortgage was near record lows at 3.65 percent last week, significantly less than the historic average of roughly 6 percent.
Roberta Fuchs and Sharon Roberts contributed to this report.