A report in aol.com written by Reuters, shows the number of existing homes resold dropped to an 18 month low last month. This is thought to be due to the combined effects of the poor weather and a lack of inventory for potential buyers to choose from.
According to the National Association of Realtors, the number of home sales dropped by 5.1% to reach an annual rate of 4.62 million. This is the lowest level seen since July 2012. The rate for December remained unchanged at 4.87 million. The chief economist of the NAR, Lawrence Yun pointed out that the winter weather had impacted a wide range of economic activities, and that the effects weren’t just confined to housing. It could be that a pickup in housing activity will be delayed until spring. The economists polled by Reuters had predicted housing sales would drop to 4.68 million in January as the figures are calculated by the number of contracts closed. The sales figures for January are mostly based on contracts signed the previous month. It’s anticipated February sales figures could be just as weak due to the low temperatures seen in January.
Areas where sales fell quite sharply included the Midwest, the South and the Northeast, as these areas had to deal with snowstorms and ice in January. However figures were down by 7.3% in the West, and this shows that sales were affected by other factors than just the weather. People looking to purchase a home have been hit by a combination of increasing mortgage rates and higher house prices that have outstripped income growth. These factors have made buying a home more difficult.
In addition there has been a lack of inventory on the market, and the number of new households being formed dropped considerably last year. During the last six months the number of resales has declined in five of them, after reaching a peak in July. The housing market is also being impacted by the number of housing starts and permits issued.
Last month the inventory of homes for sale increased by 2.2% compared to December, reaching a 4.9 month supply compared to 4.6 months seen in December. In spite of the increase this is still well below the six months’ supply that is considered necessary for a healthy housing market. Tighter inventory levels helped push the median price of a previously home up by 10.7%, reaching $188,900. The number of first-time buyers is still low, accounting for just 26% of transactions.