There’s good news and bad news for January’s existing-home sales, according to the National Association of Realtors. On the one hand, sales in January, for the fourth straight month, were ahead of the pace of sales a year ago. On the other hand, existing-home sales in all major regions declined last month to their lowest rate in nine months, with the West and Northeast getting the worst of it.
The NAR’s latest look at existing-home sales shows that while sales nationally were 3.2 percent higher this January than last, single-family transactions were down almost 5 percent to 4.82 million. This is the lowest since last April’s 4.75 million.
Existing-home sales in the West fell the most (7.1 percent), followed by the Northeast, which fell 6 percent in January. The South fell 4.6 percent and the Midwest 2.7 percent. Sales in each region, however, were higher than a year ago ‒‒ particularly the South, which is more than 5 percent up on last year’s sales.
Lawrence Yun, NAR’s chief economist, blames typical new-year unpredictability for part of the drop. But a bigger factor is the one-two punch of low inventory ‒‒ down a half-percent from a year ago ‒‒ and higher sale prices across the country.
"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," Yun said. "Realtors are reporting that low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delayed decisions."
This rise marks the 35th consecutive month of year-over-year price gains, which Yun said is another bright light amid improving labor markets and the economy in general. Keep in mind, however, that mortgage rates in January were a still-low 3.67 percent, according to Freddie Mac. Yun will withhold final judgment until rates rise and their impact on affordability is fully tested.
Restrictions in lending, whether for single-family houses or condos, are a continued bugaboo for industry insiders. NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark. said that the Federal Housing Administration’s overly restrictive approval process limits buyers’ access to condos.
"Condominiums offer an affordable option and are the first step to homeownership for many homebuyers," Polychron said.
NAR has been lobbying the FHA to develop more flexible and affordable financing policies for those looking to buy condos. According to NAR’s latest report, existing condo and co-op sales declined 3.5 percent, from 570,000 to 550,000 units from December to January.