Last Friday, the National Association of Realtors® released its monthly report on homes sold through multiple-listing-services throughout the U.S. Although existing-home sales are above year-ago levels, what grabbed most headlines was the 7.2% drop in sales from December. Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 11.5% compared with January 2009. (These are unit sales, not price increases or decreases.)
Lawrence Yun, NAR chief economist, said, in his usual understated manner when there is bad news to deliver: “The latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery.”
Reduced inventory levels (the number of homes for sale) may account for the firming-up of prices that was reflected in the January sales numbers. Total housing inventory at the end of January fell 0.5 percent to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace on a national basis. This absorption rate is slightly higher than in December, due to the slowdown in sales as well as to the decrease is homes listed for sale. Raw unsold inventory is 9.6 percent below a year ago, and is at the lowest level since March 2006. This is not necessarily good news since we know there is a desire to sell – banks are simply slow in processing foreclosures and other homeowners are giving up and pulling their homes off the market.
The NAR practitioner survey, a separate data-collection device from the monthly home sales report, showed some positive indications: Investors accounted for 17 percent of transactions in January, up from 15 percent in December. When investors begin to come into the market, it means prices may be hitting bottom. The survey also shows that overall buyer traffic increased 9.4 percent in January. It’s taking a while for these new prospective buyers to sit down and write offers, however.
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