National Market Report - January

National Home Sales Continue To Go Up
Sales of existing homes recorded modest gains in January, the third straight month-over-over-month increase. This pace of home sales is also higher than a year ago.

Existing-home sales, which are completed transactions that include single-family, townhomes, condos, and co-ops, increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January, and are 5.3 percent above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier.

*Seasonally adjusted annual rate is the amount of homes that are predicted to sell this year. 

Lawrence Yun, National Associated Realtors chief economist attributed the increase to the improvements in the "economy and jobs, which are helping consumer confidence. Yun added, "The extremely favorable housing affordability conditions are a big fact, but buyers have been contained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchased with rising investor activity."

Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010. All cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010.

All-cash purchases are at the highest level since NAR (National Association of Realtors) started measuring these purchases monthly in October 2008.

"Incrased in all-cash transaction, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it's not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchased undervalued homes," Yun said.

Home Prices Still Going Down and Distressed Property Sales Going Up

The national average existing-home price for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes edged up to 37 percent of all homes sold in January from 36 percent in December; it was 38 percent in January 2010.

Specifically in the South, existing-home sales increased 3.6 percent to an annual pace of 2.02 million in January and are 8.0 percent higher than January 2010. The median price in the South was $136,600, down 2.1 percent from a year ago.


NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the median price is being dampened by unusual market factors. “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said.


In Summary - January

- More homes were sold than expected
- Buyers are paying with cash more than ever before
- Avg Home prices fell in January when compared to a year ago
- With more sales the total inventory of homes dropped 5.1% to 3.38 million units, the lowest inventory level in more than a year. However, there is still too much inventory for sellers to regain some of their "pricing power"