F Forecasts

Existing Home Sales For January Will Beat Estimates

18 February, 2022
Existing Home Sales

On Friday, the National Association of Realtors (NAR) will release the U.S. Existing Home Sales (EHS) for January. According to the Bloomberg consensus, EHS should decrease by 1.0% MoM to 6.10 million SAAR (v 6.18 million prior). My proxies suggest that EHS will surprise upward, rebounding from December.


  • Local/regional data suggest that Existing Home Sales rebounded in January
  • Several households probably rushed to buy a house as mortgage rates started rising
  • Investors share of housing transactions likely remained elevated

1. Local/Regional Data Suggest That Existing Home Sales Rebounded In January

According to my calculation, in order for the sales in adjusted value (after seasonal adjustment) to match the consensus (i.e. 6 100k), non-adjusted data would have to decrease by 8.3% YoY from January 2021 to January 2022. Local figures that I have gathered show a smaller drop. Bill McBride also found similar results with sales expected to fall by 6.8% YoY. My guess is that it could be even better especially looking at data from housing providers such as Remax (-5.3% YoY). As a result, I expect housing transactions to rebound on a MoM basis.

2. Several Households Probably Rushed To Buy A House As Mortgage Rates Started rising

Mortgage rates have rebounded significantly since the beginning of the year as the Fed is on track to tighten its policy. In this context, several househoulds probably rushed to buy a house as they were concerned that rates will be even higher in a few months. This idea was reflected by the spike of mortgage purchase applications in late January. They hit the highest level since February 2021 and the four-week moving average was up 2.6% compared to late December.

3. Investors Share Of Housing Transactions Likely Remained Elevated

Two days ago, Redfin published a very interesting analysis showing that investors bought a record high share of U.S. homes that were purchased in the fourth quarter. Based on an analysis of county records of 1-4 family homes sold in 40 metro areas, Redfin noted “Real estate investors bought a record 18.4% of the homes that were sold in the U.S. during the fourth quarter of 2021, up from 12.6% a year earlier and a revised rate of 17.4% in the third quarter.” Redfin economist Sheharyar Bokhari highlighted “Investors are chasing rising prices because rental payments are also skyrocketing, incentivizing investors who plan to rent out the homes they buy.” This trend probably continued in January as rents kept rising.