Existing Home Sales Disappoint for December but Year-to-Year January Sales Increased at 11.5%

“Existing-home sales fell in January but are above year-ago levels, according to the National Association of Realtors. Existing-home sales – including single-family, townhomes, condominiums and co-ops – dropped 7.2% to a seasonally adjusted annual rate of 5.05 million units in January from a revised 5.44 million in December, but remain 11.5% above the 4.53 million-unit level in January 2009 (see top two charts above).

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.”

Total housing inventory at the end of January fell 0.5% to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, up from a 7.2-month supply in December, but down from a 9.6-month supply in January 2009 (see bottom chart above).”

Other reports for January real estate sales:

1. Sales of existing homes and condos in South Florida rose in January, though prices continued to fall. Statewide, existing home sales were up 28% last month, to 10,465 homes sold from 8,174 homes sold a year ago, according to Florida Realtors. Existing condo sales rose 81% statewide compared to the previous year’s sales figure. This marks the 17th consecutive month that Florida sales activity has increased in a year-to-year comparison.

2. Reflecting a trend seen across much of the West, Phoenix region January home sales fell harder than normal from December, but they were still the highest for a January since 2007.
There were continued signs of price stability for resale houses. The median price paid for existing single-family detached houses didn’t decline from the year-ago level for the first time since July 2007, though it slipped a bit from December.

3. Las Vegas region January home sales fell more than usual from December but were still the highest for that month since 2007 thanks to relatively strong demand for condos and other sub-$200,000 homes. The overall median sale price declined from December, but one home-type category – resale single-family detached houses – showed continued signs of price stability.

MP: Many reports are expressing concern about the strength of the real estate recovery because of the huge drop from December sales, but year-to-year January sales increased at 11.5%, and are at the highest for that month in three years both nationally and in markets like Phoenix and Las Vegas.

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About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

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