RISMEDIA, March 4, 2010
Existing-home sales fell in January 2010 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% to a seasonally adjusted annual rate of 5.05 million units in January from a revised 5.44 million in December, but remain 11.5% 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% to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, up from a 7.2-month supply in December. Raw unsold inventory is 9.6% 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 price for all housing types was $164,700 in January, unchanged from a year earlier. Distressed homes, which accounted for 38% 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 survey shows first-time buyers purchased 40% of homes in January, down from 43% in December. Investors accounted for 17% of transactions in January, up from 15% in December; the remaining sales were to repeat buyers. The survey also shows that buyer traffic increased 9.4% 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% in January from 4.93% in December; the rate was 5.05% in January 2009.
Single-family home sales fell 6.9% 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% above the 4.08 million pace in January 2009. The median existing single-family home price was $163,600 in January, down 0.4% from a year ago.
Existing condominium and co-op sales dropped 8.1% to a seasonally adjusted annual rate of 620,000 in January from 675,000 in December, but are 38.1% above the 449,000-unit level a year ago. The median existing condo price was $172,400 in January, which is 1.4 % higher than January 2009.
Regionally, existing-home sales in the Northeast fell 10.9% to an annual pace of 820,000 in January but are 22.4% above a year ago. The median price in the Northeast was $245,300, a gain of 8.8% from January 2009.
Existing-home sales in the Midwest declined 6.9% in January to a level of 1.08 million but are 8.0% higher than January 2009. The median price in the Midwest was $130,300, which is 1.0% below a year ago.
In the South, existing-home sales dropped 7.4% to an annual pace of 1.87 million in January but are 12.0% above a year ago. The median price in the South was $140,200, down 2.0% from January 2009.
Existing-home sales in the West declined 5.2% to an annual rate of 1.28 million in January but are 7.6% higher than January 2009. The median price in the West was $203,400, down 5.8% from a year ago.