Inventory Hampering Home Sales and Pushing Prices Higher

Short supplies of existing home inventory continued to holdrnback sales in February the National Association of Realtors® (NAR) said today, butrncontributed to the fastest annual gain in home prices in a year.  Weather was also a factor, with lackluster salesrnin the snow-plagued Northeast offsetting gains in Sunbelt states.</p

Nationwide sales of existing single-family homes, townhomes, condominiums,rnand co-ops rose 1.2 percent to a seasonally adjusted annual rate of 4.88rnmillion in February from 4.82 million in January. Sales were 4.7 percent higherrnthan in February 2014, the fifth consecutive month that year-over-year salesrnincreased. </p

Single-family home sales increased 1.4 percent, from a seasonally adjustedrnrate of 4.28 million in January to 4.34 million.  This was 5.9 percent higher than the 4.10rnmillion pace a year earlier.  Condo andrnco-op sales were unchanged from January at a rate of 540,000 units and down 3.6rnpercent from existing unit sales in February 2014. </p

The median price of existing-homes overall in February was $202,600, whichrnis 7.5 percent above February 2014.  Itrnwas the 36^th consecutive month of year-over-year price increases andrnthe largest gain since an 8.8 percent jump last February.   The median price of a single family home wasrnup 8.1 percent from a year earlier to $204,200 and the median price of an existingrncondos was $190.200, a 2.8 percent annual increase.  </p

Inventory, while up slightly in February, remains 0.5 percent below levelsrnone year ago.  At the end of Februaryrnthere were an estimated 1.89 million homes available for sale compared to 1.90rnmillion a year earlier.  This, however,rnwas an increase of 1.6 percent from January although the unsold inventoryrnremained at a 4.6 month supply given the slightly increased rate of sales.  </p

Lawrence Yun. NAR chief economist, said sales, though up modestly inrnFebruary, have stagnated somewhat in recent months.  “Insufficient supply appears to be hamperingrnprospective buyers in several areas of the country and is hiking prices to nearrnunsuitable levels,” he said. “Stronger price growth is a boon for homeownersrnlooking to build additional equity, but it continues to be an obstacle forrncurrent buyers looking to close before rates rise.”  </p

A NAR study released in March found that the disparity between rent andrnincome growth is widening in metro areas throughout the country and is makingrnit harder for renters to become homeowners. “With all indications pointing to arnrate increase from the Federal Reserve this year – perhaps as early as thisrnsummer – affordability concerns could heighten as home prices and rents bothrncontinue to exceed wages,” Yun said.</p

The percent share of first-time buyers was 29 percent in February, up fromrn28 percent in January and the first increase since last November.  Individual investors purchased 14 percent ofrnhomes, down from 17 percent in January and 67 percent paid cash for their homernpurchases.  Cash sales overall accountedrnfor 26 percent of transactions, down 1 percentage point from January butrnsignificantly lower than the 35 percent of cash sales in February 2014. </p

Eight percent of February’s sales were foreclosures and 3 percent were shortrnsales with the total of distressed sales unchanged at 11 percent for the third straightrnmonth.  Foreclosures sold for an averagerndiscount of 17 percent below market value in February (15 percent in January),rnwhile short sales were discounted 15 percent (12 percent in January). </p

“Investor sales are trending downward due to the continued rise in pricesrnand fewer bargains available from distressed properties coming onto thernmarket,” says NAR President Chris Polychron. “Furthermore, Realtors® inrnareas popular to foreign buyers, such as South Florida and the West Coast, arernreporting tempered demand from international clients – who typically pay inrncash – due to the strengthening U.S. dollar compared to foreign currencies.”</p

The typical marketing period for properties in February was 62 days, downrnfrom 69 in January.  Short sales were onrnthe market the longest at a median of 120 days, foreclosures sold in 58 daysrnand non-distressed homes took 61 days. Thirty-four percent of homes sold inrnFebruary were on the market for less than a month.</p

February existing-home sales in the Northeast dropped 6.5 percent to anrnannual rate of 580,000, but are still 3.6 percent above a year ago. The medianrnprice in the Northeast rose 3.3 percent from a year earlier to $241,800. </p

Sales were at an annual level of 1.08 million in the Midwest, unchanged fromrnJanuary and 4.9 percent above February 2014. The median price in the Midwestrnwas $152,900, up 8.8 percent from a year ago.</p

Yun noted that “Severe below-freezing winter weather likely had an impact onrnsales as more moderate activity was observed in the Northeast and Midwestrncompared to other regions of the country.”</p

Sales were up 1.9 percent in the South to an annual rate of 2.11 millionrnunits, 6.0 percent higher than the previous February while prices rose 8.5rnpercent to a median of $177,900.</p

The West had an increase in sales of 5.7 percent to a rate of 1.11 million, 2.8rnpercent higher than a year ago. The median price in the West was $290,100, a 4.2rnpercent annual gain.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.