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Nation’s Home Market Off to a Slow Start in January

Lawrence Yun, chief economist, National Association of Realtors

Lawrence Yun, chief economist, National Association of Realtors

WASHINGTON – The nation’s existing-home sales declined in January to their lowest rate in nine months, but the pace was higher than a year ago for the fourth straight month, the National Association of Realtors announced Monday.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 4.9 percent to a seasonally adjusted annual rate of 4.82 million in January (lowest since last May at 4.90 million) from an upwardly-revised 5.07 million in December. Despite January’s decline, sales are higher by 3.2 percent than a year ago.

Lawrence Yun, NAR chief economist, says the housing market got off to a somewhat disappointing start to begin the year with January closings down throughout the country. “January housing data can be volatile because of seasonal influences, but low housing supply and the ongoing rise in home prices above the pace of inflation appeared to slow sales despite interest rates remaining near historic lows,” he said. “Realtors are reporting that low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delay decisions.”

Total housing inventory2 at the end of January increased 0.5 percent to 1.87 million existing homes available for sale, but is 0.5 percent lower than a year ago (1.88 million). Unsold inventory is at a 4.7-month supply at the current sales pace – up from 4.4 months in December.

The median existing-home price3 for all housing types in January was $199,600, which is 6.2 percent above January 2014. This marks the 35th consecutive month of year-over-year price gains.

“Although sales cooled in January, home prices continued solid year-over-year growth,” adds Yun. “The labor market and economy are markedly improved compared to a year ago, which supports stronger buyer demand. The big test for housing will be the impact on affordability once rates rise.”

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage in January fell to 3.67 percent, its lowest level since May 2013 (3.54 percent), and down from 3.86 percent in December. The average annual rate was 4.17 percent in 2014.

The percent share of first-time buyers declined to 28 percent in January, the lowest since June 2014 (also 28 percent) and down from 29 percent in December. First-time buyers represented 26 percent of sales last January.

All-cash sales were 27 percent of transactions in January, up from 26 percent in December but down from 33 percent in January of last year. Individual investors, who account for many cash sales, purchased 17 percent of homes in January, unchanged from last month and below January 2014 (20 percent). Sixty-seven percent of investors paid cash in January.

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