Despite Low Inventory, Home Sales Somehow Creep Upward

young couple with masks touring a house with a realtor
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The number of homes for sale may be extremely low these days, but that didn’t stop sellers from scrounging up enough inventory to edge sales up 0.6% in January, according to the National Association of Realtors (NAR) monthly sales report.

The uptick in sales, to a seasonally adjusted annual rate of 6.69 million homes, defied the expectations of economists who had predicted the low housing supply would tap the brakes on the zooming housing market. It was the second time in a three-day span that a major benchmark outperformed projections, as Wednesday’s surprisingly good January retail sales report showed the bracing effects of stimulus payments coursing through the economy. 

“Home sales continue to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market,” said Lawrence Yun, NAR’s chief economist, in  a press release. “Sales easily could have been even 20% higher if there had been more inventory and more choices.”

There aren’t many homes left to sell. The inventory of existing homes in January would be exhausted in 1.9 months, the same as December, at the current sales rate, which was a record low for the 39 years the NAR has been keeping track. At the end of January, inventory amounted to just 1.04 million units—down 1.9% from December and 25.7% from one year ago. Record-low interest rates (which have finally started to rise slightly) and a race for living space amid the pandemic have kept the hot housing market ablaze.

“Wow,” Jennifer Lee, senior economist at BMO, wrote in an email. “We can still count on what seems to be an insatiable demand for housing to boost the economy.”