Low Inventories Stunt Existing Home Sales Again
Low existing home inventories put the slam on sales in January for the second consecutive month, the National Association of Realtors reported yesterday.
NAR said total existing home sales fell by 3.2 percent in January to just 5.38 million, seasonally annually adjusted, from December’s revised 5.56 million. From a year ago, sales fell by nearly 5 percent. January’s slump was the largest decline on an annual basis in more than three years, NAR said to the slowest pace since September.
The report said single-family home sales fell by 3.8 percent to 4.76 million in January from 4.95 million in December and by 4.8 percent the 5.00 million pace a year ago. The median existing single-family home price rose to $241,700 in January, up 5.7 percent from a year ago.
Existing condominium and co-op sales rose by 1.6 percent to 620,000 units in January, but are fell by 4.6 percent below a year ago. The median existing condo price jumped to $231,600 in January, which is 7.1 percent above a year ago.
Every region saw sales declines. Sales in the Northeast fell by 1.4 percent to 730,000 in January and by 7.6 percent from a year ago. The median price in the Northeast rose to $269,100, 6.8 percent higher than a year ago. Sales in the Midwest fell by 6.0 percent to 1.25 million in January, and by 3.8 percent from a year ago. The median price in the Midwest rose to $188,000, up 8.7 percent from a year ago.
Sales in the South decreased by 1.3 percent to an annual rate of 2.26 million in January and by 1.7 percent from a year ago. The median price in the South rose to $208,200, up 4.3 percent from a year ago. Sales in the West fell by 5.0 percent to 1.14 million in January and by 9.5 percent from a year ago. The median price in the West jumped to $362,600, up 8.8 percent from a year ago.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte N.C., said the problem is simple: too few existing homes on the market, despite increasing by 4.1 percent from December. He said inventories are down by nearly 10 percent from a year ago.
“Competition for the limited supply of homes for sale is pulling prices higher,” Vitner said. “The scarcity of homes is most acute at the lower end of the price spectrum, adding to the frustrations of potential first-time homebuyers.”
Cheryl Young, senior economist with Trulia, San Francisco, said low inventories signal a tough spring home buying season. “We can expect fast-moving inventory, home prices remaining high and fierce competition as prospective home buyers jostle for limited listings,” she said.
NAR Chief Economist Lawrence Yun said the “utter lack” of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month.
“It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth,” Yun said.
NAR reported the median existing home price for all housing types in January rose to $240,500, up 5.8 percent from a year ago ($227,300), marking the 71st straight month of year-over-year gains.
Total housing inventory at the end of January rose 4.1 percent to 1.52 million existing homes available for sale, but was 9.5 percent lower than a year ago (1.68 million) and has fallen year-over-year for 32 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace (3.6 months a year ago).
“Another month of solid price gains underlines this ongoing trend of strong demand and weak supply,” Yun said. “The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability.”
NAR said first-time buyers represented 29 percent of sales in January, down from 32 percent in December and 33 percent a year ago. Properties typically stayed on the market for 42 days in January, up from 40 days in December but down from a year ago (50 days). Forty-three percent of homes sold in January were on the market for less than a month.
The report said all-cash sales represented 22 percent of transactions in January, up from 20 percent in December but down from 23 percent a year ago. Individual investors purchased 17 percent of homes in January, up from 16 percent both last month and a year ago.
Distressed sales represented 5 percent of sales in January, unchanged from December and down from 7 percent a year ago. Four percent of January sales were foreclosures; 1 percent were short sales.
