Existing-home sales rose by 4.3 percent from December to January, marking the third time in the last four months that the key housing measure has shown monthly gains, according to the latest data from the National Association of Realtors (NAR).
Lawrence Yun, NAR’s chief economist, said the recent uptick in sales suggests that buyers are responding to favorable market conditions.
“The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” Yun said.
Moe Veissi, NAR’s president, also said that a newfound buyer confidence is driving sales.
“Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” Veissi said. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”
In total, existing-home sales were at a seasonally-adjusted, annual rate of 4.57 million for January, a 0.7 percent increase over January 2011’s sales. In addition, NAR also reported on housing inventories, which continued their downward slide and fell to 2.31 homes, or, 6.1 months of supply. Inventories peaked at 4.04 million in July 2007, and are now 20.6 percent lower than they were in 2011.
Yun suggested that the inventory situation was neither good nor bad, and even took a subtle swipe at recent government action in the REO market.
“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” he said. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”
Yun’s comments on rental conversion programs, though, are at odds with a recent report from the Financial Times that we just wrote about.
Other details in NAR’s report included: median price continued to drop in January, falling 2.0 percent year-over-year to $154,700; investors purchased 23 percent of January’s homes, up from 21 percent in December; and contract failures continued to affect transaction, with 33 percent of agents reporting such difficulties (9 percent reported contract failures a year ago).
Existing-home sales in the Midwest increased 1.0 percent in December, which was 3.2 percent higher than January 2011. The median price in the Midwest was $122,000, down 3.9 percent from a year ago.