Existing-home sales slowed last month to a seasonally adjusted annual rate of 4.62 million—their lowest level in a year and a half—as ongoing inventory constraint lifted prices, the National Association of Realtors (NAR) reported Friday. The drop represents a 5.1 percent decline compared to both December and January last year.
On just the single-family side, sales were down to a rate of 4.05 million, a decline of 5.8 percent month-to-month and 6.0 percent year-over-year.
According to NAR, last month’s sales activity was the slowest since July 2012, when transactions stood at a rate of 4.59 million.
“Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception,” said NAR chief economist Lawrence Yun.
At the same time, Yun noted “we can’t ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates.”
“These issues will hinder home sales activity,” he said, “until the positive factors of job growth and new supply from higher housing starts begin to make an impact.”
NAR president Steve Brown, meanwhile, pointed to the impact of elevated flood insurance rates in certain impacted markets.
“Thirty percent of transactions in flood zones were cancelled or delayed in January as a result of sharply higher flood insurance rates,” Brown said. “Since going into effect on October 1, 2013, about 40,000 home sales were either delayed or canceled because of increases and confusion over significantly higher flood insurance rates. The volume could accelerate as the market picks up this spring.”
Congress is currently considering legislation to put a hold on new flood insurance rates while emergency agencies review their potential impact on housing affordability.
All-cash sales made up one-third of January transactions, up from 32 percent in December and 28 percent last year. Individual investors purchased 20 percent of homes last month, falling between last month’s 21 percent and January 2013’s 19 percent.
Meanwhile, first-time buyers accounted for only 26 percent of purchases, the lowest market share since NAR began monthly measurements in October 2008. First-time buyers should normally make up about 40 percent of sales, according to the group.
Existing-home sales decreased in all four regions as prices continued to rise. In the Northeast, sales were down 3.1 percent to an annual rate of 620,000 as the median price climbed to $241,100. In the Midwest, transactions fell 7.1 percent to a pace of 1.04 million, while the median price was up more than 7 percent to $140,300.
Sales were down 3.5 percent in the South to an annual level of 1.95 million, with the median price coming up nearly 10 percent to $161,500. Sales in the West dropped 7.3 percent to a rate of 1.01 million; the median price there was up 14.6 percent to $273,500.
Nationally, NAR puts the median existing-home price at $188,900 last month; the median price for just single-family existing homes was the same.