Existing home sales plummeted to 5.05 million units in January compared to 5.44 million in December.
This is solidly below the 5.5 million units that economists had been expecting.
NAR: Existing-home sales fell in January but are above year-ago levels, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – dropped 7.2 per cent to a seasonally adjusted annual rate1 of 5.05 million units in January from a revised 5.44 million in December, but remain 11.5 per cent above the 4.53 million-unit level in January 2009.
Lawrence Yun, NAR chief economist, said there is still some delay between shopping and closing that affected current sales. “Most of the completed deals in January were based on contracts in November and December. People who got into the market after the home buyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales,” he said. “Still, the latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery.”
Total housing inventory at the end of January fell 0.5 per cent to 3.27 million existing homes available for sale, which represents a 7.8-month supply2 at the current sales pace, up from a 7.2-month supply in December. Raw unsold inventory is 9.6 per cent below a year ago, and is at the lowest level since March 2006.
“Activity should be picking up strongly in late spring as buyers take advantage of the tax credit, which is critical to absorb distressed properties reaching the market and to continually chip away at inventory,” Yun said. “With a downtrend in the number of homes on the market, especially in the lower price ranges, values are beginning to firm but with great variance around the country.”
The national median existing-home price3 for all housing types was $164,700 in January, unchanged from a year earlier. Distressed homes, which accounted for 38 per cent of sales last month, continue to downwardly distort the median price because they typically are discounted in comparison with traditional homes in the same area.
A parallel NAR practitioner survey4 shows first-time buyers purchased 40 per cent of homes in January, down from 43 per cent in December. Investors accounted for 17 per cent of transactions in January, up from 15 per cent in December; the remaining sales were to repeat buyers. The survey also shows that buyer traffic increased 9.4 per cent in January.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said buying a home in the current environment has become more challenging. “First-time buyers and others who need a mortgage are increasingly losing out to all-cash investors for the best bargains in many areas, particularly for foreclosed homes where cash is king,” she said.
“Inventory conditions vary by price range, and of course there are major differences depending on location. Realtors® are the best buyer resource for strategies on winning bids in increasingly competitive markets,” Golder said. “The bidding for more desirable homes will only accelerate between now and the April 30 contract deadline to qualify for a tax credit of up to $8,000.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage edged up to 5.03 per cent in January from 4.93 per cent in December; the rate was 5.05 per cent in January 2009.
Single-family home sales fell 6.9 per cent to a seasonally adjusted annual rate of 4.43 million in January from a level of 4.76 million in December, but are 8.6 per cent above the 4.08 million pace in January 2009. The median existing single-family home price was $163,600 in January, down 0.4 per cent from a year ago.
Existing condominium and co-op sales dropped 8.1 per cent to a seasonally adjusted annual rate of 620,000 in January from 675,000 in December, but are 38.1 per cent above the 449,000-unit level a year ago. The median existing condo price5 was $172,400 in January, which is 1.4 per cent higher than January 2009.
Regionally, existing-home sales in the Northeast fell 10.9 per cent to an annual pace of 820,000 in January but are 22.4 per cent above a year ago. The median price in the Northeast was $245,300, a gain of 8.8 per cent from January 2009.
Existing-home sales in the Midwest declined 6.9 per cent in January to a level of 1.08 million but are 8.0 per cent higher than January 2009. The median price in the Midwest was $130,300, which is 1.0 per cent below a year ago.
In the South, existing-home sales dropped 7.4 per cent to an annual pace of 1.87 million in January but are 12.0 per cent above a year ago. The median price in the South was $140,200, down 2.0 per cent from January 2009.
Existing-home sales in the West declined 5.2 per cent to an annual rate of 1.28 million in January but are 7.6 per cent higher than January 2009. The median price in the West was $203,400, down 5.8 per cent from a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.