The National Association of Realtors (NAR) reports another rise in existing home sales in January which, combined with a corresponding drop in inventory, is encouraging a positive market outlook. The latest index shows the inventory of existing homes dropped 0.4% from December through January as prospective buyers and investors snap up distressed properties. NAR analysts attribute the month-on-month gain on favorable market conditions comprised of low home prices and increasing lending opportunities. Completed transactions increased an average of 4.3% in January, with some areas of the country experiencing gains as high as 8.8%. For more on this continue reading the following article from Property Wire.
Existing home sales in the United States increased in January, marking three gains in the past four months, while inventories continued to improve, according to the latest analysis from the National Association of Realtors.
Its existing home sales index, which covers completed transactions that include single family homes, town homes, condominiums and co-ops, increased 4.3% to a seasonally adjusted annual rate of 4.57 million in January from a downwardly revised 4.38 million unit pace in December and is 0.7% above a spike to 4.54 million in January 2011.
Lawrence Yun, NAR chief economist, said strong gains in contract activity in recent months show buyers are responding to very favourable market conditions.
‘The uptrend in home sales is in line with all of the underlying fundamentals such as pent up house hold formation, record low mortgage interest rates, bargain home prices, sustained job creation and rising rents,’ he explained.
Total housing inventory at the end of January fell 0.4% to 2.31 million existing homes available for sale, which represents a 6.1 month supply at the current sales pace, down from a 6.4 month supply in December.
‘The broad inventory condition can be described as moving into a rough balance, not favouring buyers or sellers. Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets,’ Yun said, adding that a government proposal to turn bank owned properties into rentals on a large scale does not appear to be needed at this time.
Total unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 20.6% below a year ago, the report also shows.
NAR president Moe Veissi said that buying power is enticing more potential home buyers. ‘Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago. With other favourable market factors, these are hopeful indicators leading into the spring home buying season. We’re cautiously optimistic that an uptrend will continue this year,’ he added.
The national median existing home price for all housing types was $154,700 in January, down 2% from January 2011. Distressed homes, that is foreclosures and short sales which sell at deep discounts, accounted for 35% of January sales of which 22% were foreclosures and 13% were short sales. This is up from 32% in December but less than the 37% in January 2011.
‘Home buyers over the past three years have had some of the lowest default rates in history. Entering the market at a low point and buying at discounted prices have greatly helped in that success,’ said Yun.
All cash sales were unchanged at 31% in January compared with 32% in January 2011. Investors account for the bulk of cash transactions, buying 23% of homes in January, up from 21% in December and the same as January 2011.
First time buyers rose to 33% of transactions in January from 31% in December compared with 29% in January 2011.
Some 47% of NAR members report that contracts settled on time in January. Some 21% had delays and 33% experienced contract failures. Contract cancellations are unchanged from December but were only 9% in January 2011. NAR said that they are caused largely by declined mortgage applications and failures in loan underwriting from appraisals coming in below the negotiated price.
Single family home sales rose 3.8% to a seasonally adjusted annual rate of 4.05 million in January from 3.90 million in December, and are 2.3% above the 3.96 million unit pace a year ago. The median existing single family home price was $154,400 in January, down 2.6% from January 2011.
Existing condominium and co-op sales increased 8.3% to a seasonally adjusted annual rate of 520,000 in January from 480,000 in December but are 10.3% lower than the 580,000 unit level in January 2011. The median existing condo price was $156,600 in January, up 2% from a year ago.
Regionally, existing home sales in the Northeast rose 3.4% to an annual pace of 600,000 in January and are 7.1% above a year ago. The median price in the Northeast was $225,700, which is 4.2% below January 2011.
Existing home sales in the Midwest increased 1% in December to a level of 980,000 and are 3.2% higher than January 2011. The median price in the Midwest was $122,000, down 3.9% from a year ago.
In the South, existing home sales rose 3.5% to an annual level of 1.76 million in January but are unchanged from a year ago. The median price in the South was $134,800, which is 0.3% below January 2011.
Existing home sales in the West jumped 8.8% to an annual pace of 1.23 million in January but are 3.1% below a spike in January 2011. The median price in the West was $187,100, down 1.8% from a year ago.
This aritcle was republished with permission from Property Wire.