Existing home sales in the United States fell in January to the lowest level in a year and a half, but ongoing inventory shortages continue to lift prices in much of the country, according to the latest report from the National Association of Realtors.
Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, dropped 5.1% to a seasonally adjusted annual rate of 4.62 million in January from 4.87 million in December.
The data also shows that sales are 5.1% below the 4.87 million unit pace in January 2013 and last month’s level of activity was the slowest since July 2012, when it stood at 4.59 million.
Lawrence Yun, NAR chief economist, said unusual weather is playing a role. ‘Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception,’ he said.
‘Some housing activity will be delayed until spring. At the same time, we can’t ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates. These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impact,’ he added.
The figures also reveal the extent of house price growth. The median existing home price for all housing types in January was $188,900, up 10.7% from January 2013. Distressed homes, that is foreclosures and short sales, accounted for 15% of January sales, compared with 14% in December and 24% in January 2013.
Some 11% of January sales were foreclosures and 4% were short sales. Foreclosures sold for an average discount of 16% below market value in January, while short sales were discounted 13%.
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Total housing inventory at the end of January rose 2.2% to 1.90 million existing homes available for sale, which represents a 4.9 month supply at the current sales pace, up from 4.6 months in December. Unsold inventory is 7.3% above a year ago, when there was a 4.4 month supply. A supply of 6.0 to 6.5 months represents a rough balance between buyers and sellers.
NAR president Steve Brown said that in addition to disruptive weather, higher flood insurance rates are impacting the market in areas designated as flood zones, which account for roughly 8% to 9% of sales. He pointed out that 30% of transactions in flood zones were cancelled or delayed in January as a result of sharply higher flood insurance rates.
‘Since going into effect on 01 October 2013, about 40,000 home sales were either delayed or cancelled because of increases and confusion over significantly higher flood insurance rates. The volume could accelerate as the market picks up this spring,’ he added.
Congress is considering legislation to halt new flood insurance rates so the Federal Emergency Management Agency can complete an affordability study and determine the full impact of the law.
Homes are also selling faster. The median time on market for all homes was 67 days in January, down from 72 days in December and 71 days on market in December 2013. Short sales were on the market for a median of 150 days in January, while foreclosures typically sold in 58 days and non-distressed homes took 66 days, indeed 31% of homes sold in January were on the market for less than a month.
First time buyers accounted for 26% of purchases in January, down from 27% in December and 30% in January 2013. This is the lowest market share for first time buyers since NAR began monthly measurement in October 2008. Normally, they should be closer to 40%.
All cash sales comprised 33% of transactions in January, up from 32% in December and 28% in January 2013. Individual investors, who account for many cash sales, purchased 20% of homes in January, compared with 21% in December and 19% in January 2013. Seven out of 10 investors paid cash in January.
Single family home sales fell 5.8% to a seasonally adjusted annual rate of 4.05 million in January from 4.30 million in December, and are 6% below the 4.31 million unit pace in January 2013. The median existing single family home price was $188,900 in January, up 10.4% from a year ago.
Existing condominium and co-op sales were unchanged at an annual rate of 570,000 units in January, and are 1.8% above a year ago. The median existing condo price was $188,700 in January, which is 13% above January 2013.
Regionally, existing home sales in the Northeast declined 3.1% to an annual rate of 620,000 in January, and are also 3.1% below January 2013. The median price in the Northeast was $241,100, up 6.6% from a year ago.
Existing home sales in the Midwest dropped 7.1% in January to a pace of 1.04 million, and are 8.8% below a year ago. The median price in the Midwest was $140,300, which is 7.6% higher than January 2013.
In the South, existing home sales declined 3.5% to an annual level of 1.95 million in January, but are 1.6% higher than January 2013. The median price in the South was $161,500, up 9.4% from a year ago. Existing home sales in the West dropped 7.3% to a pace of 1.01 million in January, and are 13.7% below a year ago. Sales in the West are attenuated by tight inventory in many areas, pushing the median price to $273,500, up 14.6% from January 2013.
This article was republished with permission from Property Wire.