WASHINGTON (February 23, 2011)—The uptrend in existing-home sales continues, with January sales rising for the third consecutive month with a pace that is now above year-ago levels, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales, including single-family, townhomes, condominiums, and co-ops, increased 2.7% last month and are 5.3% above January 2010. This is the first time in seven months that sales activity was higher than a year earlier.
The improvement is good but could be better, said NAR chief economist Lawrence Yun. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable 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.”
Who’s buying homes?
A separate NAR survey shows 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. 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.
Median home price falls slightly
The national median existing-home price for all housing types was $158,800 in January, down 3.7% from January 2010. Distressed homes edged up to a 37% market share in January from 36% in December, but down from the 38% market share of January 2010.
Unusual market factors are dampening the median price, said NAR President Ron Phipps. “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said. “Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”
Fewer homes on market
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.
Single-family, condo, co-op home sales rise
Single-family home sales rose 2.4% in January and are 4.9% higher than the level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7% from a year ago.
Existing condominium and co-op sales increased 4.7% in January, and are 7.9% above the sales pace one year ago. The median existing condo price was $154,900 in January, which is 10.2% below January 2010.
Regional home sales
Regionally, existing-home sales in the Northeast fell 4.6% in January from a spike 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 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% in January and are 8% higher than January 2010. The median price in the South was $136,600, down 2.1% from a year ago.
Existing-home sales in the West rose 7.9% in January and are 7% above January 2010. The median price in the West was $193,200, down 5.7% from a year ago.