Sales of existing home sales were up 5.3% in January from a year ago. While economists expected sales to drop, instead they discovered some positive news in a housing market that is still on a bumpy road to recovery. See the following article from The Street for more on this.
More people bought existing homes in January, with sales activity accelerating at a rate above year-ago levels for the first time in seven months.
According to the National Association of Realtors, existing home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December. Economists were expecting existing home sales to drop to 5.23 million from 5.28 million reported previously.
The sales activity was 5.3% higher than the 5.09 million reported in January 2010. This is the first time in seven months that sales activity was higher than a year earlier.
"The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence," Lawrence Yun chief economist at NAR, said. "The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity."
All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was 20 percent in 2009, rising to 28 percent last year.
High levels of cash purchases pulls down the median price of existing homes. The national median existing-home price for all housing types was $158,800 in January, down 3.7 percent from January 2010.
Total housing inventory at the end of January fell 5.1 percent to 3.38 million existing homes available for sale, which represents a 7.6-month supply at the current sales pace, down from an 8.2-month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply.
The SPDR Homebuilders ETF (XHB) was down 0.5% in Wednesday morning trades. Shares of Toll Brothers (TOL) and Ryland Group (RYL) were up 2.3% and 1% respectively, with most homebuilders trading weaker.
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