Demand is steadily increasing for housing, but inventory continues to tighten, leaving existing home sales in a steadily improving position, restricted by the low number of available units for sale.
Existing home sales up 0.4 percent
According to the National Association of Realtors (NAR), existing home sales (completed transactions) rose 0.4 percent in January compared to December, and are up 9.1 percent compared to January 2012, but tight inventory levels are holding sales back, as available units cannot keep up with the demand. NAR reports sales rose in all regions but the West which has the most limited inventory.
Dr, Lawrence Yun, NAR chief economist, said “Buyer traffic is continuing to pick up, while seller traffic is holding steady. In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We’ve transitioned into a seller’s market in much of the country.”
In January alone, total housing inventory fell 4.9 percent to 1.74 million homes available for sale, marking a 4.2 month supply at the current sales pace, representing the lowest housingsupply since April 2005. Listed inventory is 25.3 percent below January 2012, and raw unsold inventory is at its lowest level since December 1999. Homes are now selling nearly four weeks faster than they did a year ago.
“We expect a seasonal rise of inventory this spring, but it may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth,” Dr. Yun explained.
Existing home sales point to faster sales
In January, the national median existing-home price for all housing types was $173,600, up 12.3 percent for the year, marking the 11th consecutive month of year-over-year price increases which has not happened since July 2005 to May 2006, and is the strongest increase since November 2005.
Distressed homes accounted for 23 percent of January sales, down from 24 percent in December and 35 percent in January 2012 (14 percent were foreclosures, 9 percent short sales). Foreclosures sold for an average discount of 20 percent below market value in January, and short sales were discounted an average of 12 percent.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.41 percent in January from a record low 3.35 percent in December; it was 3.92 percent in January 2012.
The median time on market for all homes was 71 days in January, down from 73 days in December and is 28.3 percent below 99 days in January 2012. Short sales were on the market for a median of 94 days, while foreclosures typically sold in 47 days and non-distressed homes took 75 days; 31 percent of all homes sold in January were on the market for less than a month.
Unchanged from December, first time buyers still account for 30 percent of purchases for the month, down from 33 percent in January 2012, while all-cash sales fell to 1.0 percent for the month and 3.0 percent for the year, hitting 28 percent of sales. Investors, who account for most cash sales, purchased 19 percent of homes in January, down from 21 percent in December and 23 percent in January 2012.
Existing home sales across the nation
Regionally, existing-home sales in the Northeast increased 4.8 percent to an annual rate of 650,000 in January and are 12.1 percent above January 2012. The median price in the Northeast was $230,500, up 2.4 percent from a year ago.
Existing-home sales in the Midwest rose 3.6 percent in January to a pace of 1.16 million and are 17.2 percent higher than a year ago. The median price in the Midwest was $131,800, which is 8.6 percent above January 2012.
In the South, existing-home sales increased 1.0 percent to an annual level of 1.96 million in January and are 14.0 percent above January 2012. The median price in the South was $152,100, up 13.4 percent from a year ago.
Existing-home sales in the West fell 5.7 percent to a pace of 1.15 million in January and are 5.7 percent below a year ago. The median price in the West was $239,800, which is 26.6 percent above January 2012.