Existing home sales, which are completed transactions that include single-family, town homes, condominiums and co-ops, increased 2.7% to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December.
That means that sales are now 5.3% above the 5.09 million level in January 2010, the first time in seven months that sales activity was higher than a year earlier.
‘The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,’ said Lawrence Yun, NAR chief economist.
‘The extremely favourable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity,’ he added.
A parallel NAR practitioner survey shows that first time buyers purchased 29% of homes in January, down from 33% in December and 40% in January 2010 when an extended tax credit was in place.
Investors accounted for 23% of purchases in January, up from 20% in December and 17% in January 2010 while the balance of sales was to repeat buyers. All cash sales rose to 32% in January from 29% in December and 26% in January 2010.
‘Increases in all cash transactions, the investor market share and distressed home sales all go hand in hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,’ Yun said.
All cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15% of the market. The average of all cash deals was 20% in 2009, rising to 28% last year.
The national median existing home price for all housing types was $158,800 in January, down 3.7% year on year. Distressed homes edged up to a 37% market share in January from 36% in December, compared with 38% in January 2010.
‘Unprecedented levels of all cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,’ said Ron Phipps, NAR president.
‘Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value,’ he added.
Total housing inventory at the end of January fell 5.1% to 3.38 million existing homes available for sale, which represents a 7.6 month supply at the current sales pace, down from an 8.2 month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3 month supply.
Regionally, existing home sales in the Northeast fell 4.6% to an annual pace of 830,000 in January from a peak in December and are 1.2% below January 2010. The median price in the Northeast was $236,500, which is 4% below a year ago.
Existing home sales in the Midwest rose 1.8% in January to a level of 1.14 million and are 3.6% above a year ago. The median price in the Midwest was $126,300, which is 3.2% below January 2010.
In the South, existing home sales increased 3.6% to an annual pace of 2.02 million in January and are 8% higher than January 2010. The median price in the South was $136,600, down 2.1%, year on year.
Existing home sales in the West rose 7.9% to an annual level of 1.37 million in January and are 7% above January 2010. The median price in the West was $193,200, down 5.7% from a year ago.
