Existing Sales Up, Inventory Down

Existing home sales increased 4.3 percent in January to a seasonally adjusted level of 4.57 million units. That level is 0.7 percent above the January 2011 seasonally adjusted annual rate, and is the third increase over the past four months. The National Association of Realtors (NAR) reported that the seasonally adjusted sales of existing homes (comprised of completed transactions of single-family, townhouses, condominiums and coops) rose in all four regions, and only the West reported a decline, 3.1 percent, from the same period in 2011.  

Single-family home sales increased 3.8 percent in January to a seasonally adjusted annual rate of 4.05 million units and were 2.3 percent above the 3.96 million level in January 2011. Condominium and co-op sales increased 8.3 percent in January to a seasonally adjusted annual rate of 520,000 units, but were down 10.3 percent from the 580,000 pace of January 2011. 

The total housing inventory at the end of January dropped 0.4 percent to 2.31 million existing homes for sale. At the current sales level, this inventory represents a 6.1 month supply, down from a 6.4 month supply in December.  NAR reported that foreclosure sales were moving quickly across most markets. NAR reported 35 percent of sales were distressed sales, defined as foreclosures and short sales sold at deep discounts.

First-time buyers increased their share to 33 percent in January from 31 percent in December, and from 29 percent from the same period a year ago. Investors took 23 percent of sales in January, compared to 21 percent in December and 23 percent during the same period one year ago. All-cash sales remained at 31 percent, compared to 32 percent in January 2011.   

Contract failures, which have been elevated in recent months, remained unchanged again in January as in December when 33 percent of NAR members reported cancellations caused by declined mortgage applications and failures in loan underwriting from the appraised value coming in below the negotiated price. The cancellation rate is much higher than the 9 percent rate reported during January a year ago.

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