U.S. home sales surge to 10-year high in Jan, signals growing confidence

U.S. home buyers shrugged off higher prices and mortgage rates existing home sales data released by the National Association of Realtors (NAR) showed on Wednesday. After reporting a drop in U.S. existing home sales in the previous month, U.S. existing home sales rebounded by more than expected in the month of January.

NAR said existing home sales surged up by 3.3 percent to an annual rate of 5.69 million in January after falling by 1.6 percent to a revised 5.51 million in December. Data hit a 10-year high in January and was above expectations for existing home sales to climb to an annual rate of 5.54 million.

At the regional level, sales improved in all regions barring the Midwest, where sales fell 1.6 percent on the month. Inventory, on a seasonally adjusted basis, amounted to 1.69mn units in January, one of the lowest readings of the past two decades. Meanwhile, median home prices rose 7.11 percent y/y.

Upbeat data came as the labor market nears full employment and investors wait for the Trump administration to act on its promises to cut taxes, increase infrastructure spending and reduce regulations. Data signals rising confidence in the economy and bolsters expectations of a pickup in growth in the first quarter.

"Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home," said NAR chief economist Lawrence Yun.