2015 Starts Slowly for Existing Home Sales

Existing home sales in January were disappointingrnto start the New Year, declining to their lowest rate in nine months.  The sales, which include completed sales ofrnsingle-family homes, townhouses, condominiums, and co-ops, were down 4.9rnpercent from December’s 5.7 million rate to a seasonally adjusted annual raternof 4.82 million.  </p

The rate of sales was the slowest since May 2014 when thernannual pace was 4.90 million but sales were higher than a year earlier, up 3.2rnpercent. It was the fourth straight month that existing home sales bettered thernscore from the previous year. </p

Lawrence Yun, NAR chief economist, called the launch of the New Year somewhatrndisappointing and noted that January closings were down throughout the country.rn”January housing data can be volatile because of seasonal influences, but lowrnhousing supply and the ongoing rise in home prices above the pace of inflationrnappeared to slow sales despite interest rates remaining near historic lows,” hernsaid. “Realtors are reporting that low rates are attractingrnpotential buyers, but the lack of new and affordable listings is leading somernto delay decisions.”</p

The numbers of available homes remain fairly stagnant.  The inventory increased 0.5 percent inrnJanuary to 1.87 million existing homes but that number is 0.5 percent lowerrnthan one year ago.  Unsold inventory isrnat a 4.7-month supply at the current sales pace – up from 4.4 months inrnDecember.</p

Sales of existing single-family homes dropped 5.1 percent torna seasonally adjusted annual rate of 4.27 million in January from 4.50 millionrnin December, but remained 3.9 percent above the 4.11 million pace a year ago.  Existing condo and co-op sales saw salesrndecline by 3.5 percent, from a 570,000 unit annual pace in December to 550,000rnin January which was also 1.8 percent below sales in January 2014.  </p

NAR President Chris Polychron criticized what he called the Federal HousingrnAdministration’s (FHA’s) overly restrictive approval process for condo purchases,rnsaying it limits buyers’ access to condos even though these properties arernamong the strongest in FHA’s portfolio. “Condominiums offer an affordablernoption and are the first step to homeownership for many homebuyers,” he said.rn”NAR has urged the FHA to develop policies that will give buyers access to morernflexible and affordable financing opportunities and a wider choice of approvedrncondo developments.”</p

Homes continued a 35 month trajectory of rising prices.  The median price for all existing homes soldrnin January was $199,600, which is 6.2 percent above the January 2014 median. Thernmedian existing single-family home price was $199,800 in January, up 6.3rnpercent from January 2014 and the condo price was $198,300, a 5.3 percentrnannual increase. </p

“Although sales cooled in January, home prices continued solidrnyear-over-year growth,” adds Yun. “The labor market and economy are markedlyrnimproved compared to a year ago, which supports stronger buyer demand. The bigrntest for housing will be the impact on affordability once rates rise.”  </p

The percent share of first-time buyers declined to 28 percent in January,rnmatching the most recent low in June 2014 and down from 29 percent in December.rnFirst-time buyers represented 26 percent of sales last January.  Individual investors purchased 17 percent ofrnthe homes sold in January, unchanged from December but down 3 percentage pointsrnfrom a year earlier.  Sixty-seven percentrnof investors paid cash for the homes they purchased and cash sales rose onernpercentage point from December to account for 27 percent of existing homerntransactions.  One year earlier a thirdrnof sales were all-cash.</p

Distressed sales made up 11 percent of existing sales in Januaryrncompared to 15 percent a year earlier, 8 percent were foreclosures and 3rnpercent short sales.   Foreclosures sold for an average discount ofrn15 percent below market value in January while short sales were discounted 12rnpercent.  Discount levels were unchangedrnfrom December. </p

Properties typically stayed on the market slightly longer in January (69rndays) than December (66 days) and a year ago (67 days). Short sales were on thernmarket the longest at a median of 128 days in January, while foreclosures soldrnin 63 days and non-distressed homes took 68 days. Thirty percent of homes soldrnin January were on the market for less than a month.</p

Existing-home sales in the Northeast fell 6.0 percent to an annual rate ofrn630,000, but are 3.3 percent above a year ago. The median price in thernNortheast was $247,800, a 2.7 percent annual increase. </p

In the Midwest, existing-home sales declined 2.7 percent to an annual levelrnof 1.08 million in January, but are still 0.9 percent above January 2014. Thernmedian price in the Midwest was $151,300, up 8.2 percent from a year ago.</p

Sales in the South decreased 4.6 percent to an annual rate of 2.07 millionrnin January, 5.6 percent above January 2014. The median price in the South wasrn$171,900, 7.4 percent higher than a year ago.</p

Existing-home sales in the West dropped 7.1 percent to an annual rate ofrn1.04 million in January, but are still 1.0 percent above a year ago. The medianrnprice in the West was $291,800, which is 7.2 percent above January 2014.

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