Sales of existing homes up 4.3% in January
Thursday, 23 February 2012 | 00:00
Sales of U.S. existing homes rose 4.3% in January and inventories fell to nearly seven-year lows, as lower prices, unusually warm weather and an improving economy all lifted demand.
The National Association of Realtors said Wednesday that January sales were at a seasonally adjusted annual rate of 4.57 million, compared to a MarketWatch-compiled economist forecast of 4.7 million.
Sales rose in all four major regions, including an 8.8% pop in the West.
Job creation, mild weather, rising rents, and increased household formation contributed to the sales gains, according to Lawrence Yun, chief economist of the NAR.
“Things are genuinely improving,” Yun said. “Maybe we are seeing household formation popping out,” he added. That could mean children moving out of their parents’ homes as they got a job, he said.
December’s sales were downwardly revised to a 4.38 million rate from a previously reported 4.61 million, making the final month of 2011 a 0.5% decline instead of a 5% gain.
December sales were downwardly revised as part of a seasonal adjustment that impacted monthly, but not annual, sales. That’s not to be confused with the 14% downward revision the trade group recently conducted on sales data from 2007 onwards.
The NAR called the latest revisions “minor” and said the figures didn’t impact total 2011 sales of 4.26 million.
Median sales prices in January fell 2% from a year ago to $154,700. Home prices are usually weaker in the winter due to fewer transactions, and the NAR doesn’t seasonally adjust the price data.
Inventories fell 0.4% to 2.31 million, which represents the lowest inventories since 2005. That represents 6.1 months of supply, the lowest since April 2006 and down from 6.4 months of supply in December.
“The supply and demand situation may be coming into balance,” Yun said. Inventories were as high as 4.04 million in July 2007.
Distressed sales, which include foreclosures and short sales, accounted for 35% of all transactions, up from 32% in December. All-cash transactions represented 31% of all sales, and first-time buyers accounted for 33% of all transactions, up from 31% in December.
Investors accounted for 23% of homes purchased.
Yun said there’s a competition between investors and first-time buyers for these distressed sales.
He said a White House proposal to convert real estate-owned transactions into rentals might not be needed, because these are selling “swiftly.”
The only exception, Yun said, may be where judges halted foreclosures — like in Illinois, Indiana, Ohio, New Jersey, New York and Connecticut.