Economic Watch: January Existing Home Sales Drop
Existing-home sales fell in January to the lowest level in a year-and-a-half, but ongoing inventory shortages continue to lift prices in much of the U.S., according to a report released on Friday by the National Association of Realtors.
Existing-home sales fell in January to the lowest level in a year-and-a-half, but ongoing inventory shortages continue to lift prices in much of the U.S., according to a report released on Friday by the National Association of Realtors.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 5.1% to a seasonally adjusted annual rate of 4.62 million in January from 4.87 million in December. It is also 5.1% below the 4.87 million-unit pace in January 2013. Last month’s level of activity was the slowest since July 2012, when it stood at 4.59 million.
The reason for this can be summed up in one word. Weather. “Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception,” said Lawrence Yun, NAR chief economist. “Some housing activity will be delayed until spring. At the same time, we can’t ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates. These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impact.”
The median existing-home price for all housing types in January was $188,900, up 10.7% from January 2013.
NAR President Steve Brown, said that in addition to disruptive weather, higher flood insurance rates are impacting the market in areas designated as flood zones, which account for roughly 8% to 9% percent of sales. “Thirty percent of transactions in flood zones were cancelled or delayed in January as a result of sharply higher flood insurance rates,” he said. “The volume could accelerate as the market picks up this spring.”
Single-family home sales fell 5.8% to a seasonally adjusted annual rate of 4.05 million in January from 4.30 million in December and are 6% percent below the 4.31 million-unit pace in January 2013.
Regionally, existing-home sales in the Northeast declined 3.1% to an annual rate of 620,000 in January, and are also 3.1% below January 2013. Existing-home sales in the Midwest dropped 7.1% in January to a pace of 1.04 million, and are 8.8% below a year ago.
In the South, existing-home sales declined 3.5% to an annual level of 1.95 million in January, but are 1.6% higher than January 2013. Existing-home sales in the West dropped 7.3% to a pace of 1.01 million in January, and are 13.7% below a year ago.
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