Existing home sales data continue to show a shortfall in housing inventory that has contributed to price increases.
Sales of existing condos, coops, townhomes, and single-family houses increased by 3.3% at a seasonally adjusted annual rate of 5.69 million, the highest since February 2007. Economists had estimated that they rose 1.1% at a rate of 5.55 million, according to Bloomberg.
Sales for December were revised higher.
The data, like others on the housing market, are quite volatile month-to-month and tend to be revised often. Still, they continue to expose a shortfall in housing inventory that has contributed to price increases.
In January, inventory fell year-on-year for a 20th straight month to a 3.6-month supply at the pace of sales. The median price of homes rose year-on-year for a 59th straight month, by 7.1% to $228,900.
Rising interest rates present another challenge for the housing market. Homeowners, who are accustomed to an environment of falling rates, may be reluctant to list their homes so they can retain the lower rates they locked in, and to avoid the costs associated with selling.
But on the flip side, builder confidence has increased since the election, meaning that the shortfall of inventory could start being corrected. Lighter regulations under the new administration could also make it easier for prospective homebuyers to get mortgages.
"Thus far, we have little concrete evidence regarding which of these forces is stronger," said Michelle Meyer, US economist at Bank of America Merrill Lynch, in a note on Wednesday.
