Existing Home Sales and Prices Fall in January

Existing-home sales including single family residences, condominiums, townhomes, and co-ops continued to move downward in January, as did their median prices according to the monthly survey released on Monday by the National Association of Realtors.

Preliminary January figures indicate that existing homes sold at a seasonally adjusted annual rate of 4,890,000 units, down 0.4 percent from the upwardly revised December figure of 4,910,000. The January figure was 23.4 percent below the 6,380,000 sales pace in January of 2007.

Lawrence Yun, NAR chief economist, said many potential buyers remain on the sidelines. "Subprime loans and other risky mortgage products have virtually disappeared from the marketplace, and over the past five months, this has been reflected in soft but fairly stable home sales. As the increased limits for FHA and conventional loans are implemented," he said, "more buyers will have access to safer FHA loans and lower interest rate loans in high-cost areas, which could lead to steadily higher home sales later in the year."

The median existing-home price for all housing types was $201,100 in January. This was 4.6 percent lower than one year ago (NAR does not report price changes on a month to month basis as it is felt such figures are not reliable.) In January 2007 the median price was $210,900.

NAR's press release stated that there is a "downward pull" to the national median price from a year ago because of a deterioration of sales in higher priced areas. However, roughly half of the metropolitan areas in the U.S. are showing year-over-year price increases.

NAR President Richard Gaylord urged prompt and full implementation of the new loan limits for Freddie Mac and Fannie Mae. He said some buyers in high-cost areas are waiting for higher limits on conventional loans. "Keep in mind the biggest slowdown in home sales last year was in high-cost markets, which were hard-hit by the credit crunch and notably higher interest rates for jumbo loans, but relief is on the way."

He said, "once buyers have greater access to higher loan limits, it will take a few months for increased shopping activity to translate into higher sales. We should see some movement of pent-up demand by this summer."

At the end of January there were a total of 4,190,000 million existing homes available for sale, up 5.5 percent from the 3,974,000 on the market in December. The January number represents a 10.3-month supply at the current sales pace compared to a 9.7-month supply in December. One year ago there were 3,539,000 homes on the market, a 6.7 month supply. The high for the year - 10.5 months - was in October.

Looking at the data by type of residence, single-family home sales rose 0.5 percent to a seasonally adjusted annual rate of 4.34 million in January from 4.32 million in December, but this was 22.4 percent below the 5.59 million-unit pace in January 2007. Existing condominium and co-op sales fell 6.5 percent to a seasonally adjusted annual rate of 550,000 units in January from 588,000 in December, and are 30.2 percent below the 788,000-unit level a year ago.

Condos faired better price wise than single family homes. The median existing condo price was $220,400, one percent lower in January 2008 than in January 2007, while the median existing single-family home price was $198,700 in January, down 5.1 percent from a year ago.