Existing Home Sales Rise 2.7% in January says NAR

Existing home sales continued to rise for the third consecutive month according to the National Association of Realtors.

Sales increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, 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.

“The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” said Lawrence Yun, NAR chief economist. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

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In addition, NAR said a practitioner survey shows first time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010 when an extended tax credit was in place.

Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010.

“Increases in all-cash transactions, 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 purchase undervalued homes,” Yun said.

All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was 20 percent in 2009, rising to 28 percent last year.

 

 

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  • What an odd interpretation of the situation. When prices are depressed and investors are gaining greater market share that is hardly the sign that jobs are up. If the reason why sales are up is because the job situation was improving, one would expect to see more first time buyers in the market.

    The market is much different than it was just last year. Many local markets are adjusting while some still are in free fall. It would be interesting to see where home sales are improving and if those are the markets where investors are most active. That would be a strong message for potential buyers and sellers in those communities.

    It is interesting that the delay in foreclosures was not discussed, just a modest rise in the seasonally adjusted rate of home sales. The improvement is still in the range of statistical error and is subject to correction without notice.

    The NAR report has historically been about PR not valued statistical information. Unfortunately this report is of that caliber.

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