January existing home sales rose 2.7% nationally in January to an annual rate of 5.36 million. This is the third consecutive month that existing home sales have continued to rise and they also now sit above levels of one year ago by 5.3% when sales were at a 5.09 million annual rate. According to National Association of REALTORS Chief Economist, Lawrenece Yun, this is very favorable news. “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.”
Sales of existing homes were primarily to repeat buyers but first-time buyers did account for 29% of the transactions while investors made up a 23% segment of the purchases. This reflects an uptick in the last couple months of investor purchases that also parallels with an increase in cash transactions which made up 32% of the market share. While a long way still remains to see definitive market stability it’s a positive sign that sales have been increasing and the amount of inventory fell another 5.1%, which represents a 7.6 month supply. Historically a 6 month supply of homes is what NAR terms a balanced market. Distressed housing still accounts for just over a third of housing sales and this will continue to put some downward pressure on prices, but over the last year median pricing has only fallen 3.7% nationally. As sales increase and inventory levels diminish then pricing stability will likely follow.
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