Existing Home Sales Update: January’s Surge | Episode 104 | 02-22-2024

Megan Horneman, Chief Investment Officer at Verdence Capital Advisors, looks into the latest insights from the existing home sales report for January today. Megan highlights a positive uptick, surpassing the psychological level of the 4 million home sales mark on an annualized rate, marking the most significant increase since February 2023. Although single-family homes led the surge, all regions experienced growth, with the west leading the way. However, challenges are still present as rising mortgage rates above 7 percent and persistently low inventories, are affecting affordability for both first-time and seasoned homebuyers. She discusses the hurdles in the housing market, emphasizing the elevated median home price of $379,000 compared to the five-year average of $325,000. While acknowledging the market's attempts to find stability, Megan provides valuable insights into the potential cyclical nature of these challenges. Stay tuned for weekly updates on the economic calendar, and for any questions or comments please reach out to us at podcast at Verdence dot com.

Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors. We're coming to you today, on Thursday, February 22nd, to discuss the existing home sales report that we got this morning. For the month of January, the home sales came out a little bit better than expected. We did cross back up to that psychological level of 4 million home sales on an annualized rate. It was the biggest jump we've seen since February of 2023. It was led by single-family homes, but all of the regions saw increases. The only region that was flat for the month was the northeast. Actually, the west saw the biggest gains for the month.

Some of the negative news I guess you could say out of this report is unfortunately, there are still headwinds for the housing market because in the beginning of this year the mortgage rate was below 7 percent. We saw some of the things like prospective buyers' traffic increase because we got that dip lower in mortgage rates. But unfortunately now in February, mortgage rates are back up above 7 percent, so I'm not sure how sustainable this will be in the coming months. Inventories as well are still very low. The month supply dropped again. It's the third consecutive month we've seen a drop in the month supply, the home prices.

The median price of an existing home is still elevated. That means that affordability, not only for first-time home buyers but really for all home buyers, is still a challenge. The median home price now is 379,000 versus the five-year average of 325,000. So the housing market is trying its best to find a footing here. We do think that this is a cycle. It will take time to work itself out. It's usually the first thing to drop when interest rates do start to tick up, and the bigger problem we have right now is that prices are still elevated. Inventories are low, so affordability is very low for Americans to buy a first-time home. That's all we have today, and I'll be back next week with a pretty packed economic calendar. But if you have any questions or comments, please feel free to reach out to podcast at Verdence dot com. Thank you.