National existing home sales volume fell 5.1 percent in January from the year before, but not for the reason you may think. Buyers want to buy, but there aren’t enough homes on the market.
Approximately 1.9 million homes are for sale across the U.S., which is equal to about 4.9-months of supply on hand. The nation is in a seller’s market, but closer to a normal market than in recent months.
The proof is that home prices are still escalating, according to the National Association of REALTORS. The median existing-home price in January was $188,900, up 10.7 percent from a year ago.
Home prices are also improving because fewer distressed homes are being sold. Out of the mix of homes sold in January, fifteen percent were foreclosures or short sales, down from 24 percent in January 2013.
Low inventories weren’t the only reason for slower sales. Explained Lawrence Yun, NAR chief economist, “Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception.”
Groundbreaking on new housing was frozen by the weather; starts tumbled 16.0 percent to a seasonally adjusted annual rate of 880,000 units. It was the lowest level since September, the Commerce Department said, and the largest percentage drop since February 2011.
Mortgage interest rates are higher, making it more difficult for some buyers. Mortgage commitment rates eased slightly according to Freddie Mac, to 4.43 percent for a 30-year fixed rate mortgage, from 4.46 percent in December. That’s up a full point from January 2013 when rates were 3.43 percent.
First-time homebuyers account for 40 percent of buyers in normal markets, but in January, they were only 26 percent of the market. That’s the lowest percentage since October 2008, suggesting that higher home prices and mortgage interest rates are starting to have an impact.
These factors could mean some weakening in the housing market and in the overall economy for the first quarter of 2014.
New home permits to build fell 5.4 percent, the lowest number since June 2013. And the effect of the new Qualified Mortgage standards on homebuyers has yet to be weighed