January 23, 2012 (Chris Moore)
Completed transactions of existing home purchases increased for the third time in four months and were slightly higher than a year ago while home prices took a hefty fall during the month according to the National Association of Realtors® (NAR).
Monthly existing home sales, which include single-family homes, townhomes, condos, and co-ops, increased to a seasonally adjusted rate of 4.57 million in January, up from a revised 4.38 million in December, a gain of 4.3 percent. Sales were also 0.7 percent higher than the seasonally adjusted 4.54 million completed transactions in January 2011.
For the fourth consecutive month, nearly one out of three Realtors® reported losing a sale due to a contract failure. Contract failures first spiked in June, climbing from four percent in May to 16 percent in June and remained around that level until October. In January of last year, nine percent of the Realtors® reported a contract failure.
Most contract failures are caused by declined mortgage applications or low appraisals but can also be caused by home inspection problems and employment losses.
Lawrence Yun, chief economist of NAR, stated, “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.”
Regional Home Sales:
Monthly existing home sales in the Northeast increased 3.4 percent to an annual rate of 600,000 sales and were 7.1 percent lower than in January of last year, while in the Midwest, sales were 1.0 percent higher than the previous month, increasing to a rate of 980,000 million annual sales, and were 3.9 percent lower than last year’s sales pace.
In the South, monthly existing home sales rose 3.5 percent in January at an annual pace of 1.76 million transactions and were unchanged from January 2011 levels, and in the West, sales for the month increased 8.8 percent to an annual rate of 1.23 million transactions and were 1.8 percent below last year’s sales pace.
Home prices fell 6.0 percent as the national median existing home price declined from $164,500 in December to $154,700 in January. The median home price in January was 2.0 percent lower than a year ago.
The median price in the Northeast was $225,700, which was 4.2 percent lower than a year ago, while the median price in the Midwest was $122,000, down 3.9 percent from January 2011.
In the South, the median price was $134,800, a decline of 0.3 percent from a year ago and in the West the median price was $187,100, up 8.4 percent from January of 2011.
Cash and Distressed Property Sales:
Distressed property sales accounted for 35 percent of all existing home sales in January, up from 32 percent in December but down from 37 percent in January of 2011. Foreclosure sales made up 22 percent of all existing home sales while short sales accounted for 13 percent of all existing sales.
Cash sales accounted for 31 percent of all sales in January, unchanged from December, while investors jumped in and purchased 23 percent of the homes sold in January, up from 21 percent in December.
The number of homes available for sale in January continued to dwindle as housing inventories slipped 0.4 percent to 2.31 million homes which represents a 6.1 month supply, down from a 6.4 months supply in December.
Tags: existing home sales, investors, distressed property sales, declining prices, low appraisals, cancelled contracts, median home price, contract failures, purchase cancellations