January Existing Home Sales Down Over December, Up Over January 2009
Existing-home sales fell in January but are above year-ago levels, according
to the National Association of Realtors®.
Existing-home
sales in the west— including single-family, townhomes, condominiums and
co-ops — dropped 5.2 percent (seasonally adjusted annual rate1), but
remains 7.6 percent above January 2009.
Lawrence
Yun, NAR chief economist, said there is still some delay between shopping
and closing that affected current sales. "Most of the completed deals in
January were based on contracts in November and December. People who got into
the market after the home buyer tax credit was extended in November have only
recently started to offer contracts, so it will take a couple months to close
those sales," he said. "Still, the latest monthly sales decline is not
encouraging, and raises concern about the strength of a recovery."
"Activity should be picking up strongly in late spring as buyers take
advantage of the tax credit, which is critical to absorb distressed properties
reaching the market and to continually chip away at inventory," Yun said. "With
a downtrend in the number of homes on the market, especially in the lower price
ranges, values are beginning to firm but with great variance around the
country."
The median existing-home price3 in the west for all housing types was $203,400
in January, unchanged from a year earlier. Distressed homes, which accounted
for 38 percent of nationwide sales last month, continue to downwardly distort
the median price because they typically are discounted in comparison with
traditional homes in the same area.
NAR President Vicki
Cox Golder, owner of Vicki L. Cox & Associates in Tucson,Ariz.,
said buying a home in the current environment has become more challenging.
"First-time buyers and others who need a mortgage are increasingly losing out
to all-cash investors for the best bargains in many areas, particularly for
foreclosed homes where cash is king," she said.
"Inventory conditions vary by price range, and of course there are major
differences depending on location. Realtors® are the best buyer resource for
strategies on winning bids in increasingly competitive markets," Golder said.
"The bidding for more desirable homes will only accelerate between now and the
April 30 contract deadline to qualify for a tax credit of up to $8,000."
1 The annual rate for a
particular month represents what the total number of actual sales for a
year would be if the relative pace for that month were maintained for
12 consecutive months. Seasonally adjusted annual rates are used in
reporting monthly data to factor out seasonal variations in resale
activity. For example, home sales volume is normally higher in the
summer than in the winter, primarily because of differences in the
weather and family buying patterns. However, seasonal factors cannot
compensate for abnormal weather patterns.
Existing-home sales, which include single-family, townhomes,
condominiums and co-ops, are based on transaction closings. This
differs from the U.S. Census Bureau's series on new single-family home
sales, which are based on contracts or the acceptance of a deposit.
Because of these differences, it is not uncommon for each series to
move in different directions in the same month. In addition,
existing-home sales, which generally account for 85 to 90 percent of
total home sales, are based on a much larger sample — more than 40
percent of multiple listing service data each month — and typically are
not subject to large prior-month revisions.
Single-family data collection began monthly in 1968, while condo data
collection began quarterly in 1981; the series were combined in 1999
when monthly collection of condo data began. Prior to this period,
single-family homes accounted for more than nine out of 10 purchases.
Historic comparisons for total home sales prior to 1999 are based on
monthly single-family sales, combined with the corresponding quarterly
sales rate for condos.
Each February, NAR Research incorporates a review of seasonal activity
factors and fine-tunes historic data for the previous three years based
on the most recent findings. Revisions have been made to monthly
seasonally adjusted annual sales rates for 2007 through 2009, as well
as the inventory month's supply data. There are no revisions to raw
inventory; however, there are adjustments to monthly home prices for
the past year.
2 Total inventory and month's
supply data are available back through 1999, while single-family
inventory and month's supply are available back to 1982 (prior to 1999,
condos were measured quarterly while single-family sales accounted for
more than 90 percent of transactions).
3 The only valid comparisons for
median prices are with the same period a year earlier due to the
seasonality in buying patterns. Month-to-month comparisons do not
compensate for seasonal changes, especially for the timing of family
buying patterns. Changes in the composition of sales can distort median
price data. Year-ago median and mean prices sometimes are revised in an
automated process if more data is received than was originally reported.
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