Sales of previously occupied homes fell more than expected in January as a restricted supply forced up prices and stagant wages countered the improving job market and low mortgage rates.
Purchases declined 4.9 percent to a 4.82 million annual rate, the slowest pace since April, after the upwardly revised 5.07 million rate in February, initially 5.04 million, according to the National Association of Realtors (NAR), an industry group in Washington, D.C. today. The median forecast from the Bloomberg survey of economists called for a drop of 0.8 percent to 4.95 million.
Existing home sales is the largest category in the American residence market approximately 10 times the size of the next largest grouping, new home sales.
The number of houses listed for sale slipped in January for a second month in a row and prices rose across most purchase levels.
First time buyers have had a difficult buying a home despite low mortgage charges. The building rate of new homes, often where new and younger buyers begin, has been less than half the historical average since the financial crash. And while the labor market has produced the best gains in payrolls in seventeen years, many of those jobs have been low paying or less than full time, not the type of employment that permits buyers to make the long term commitment of a new home.
Existing home sales, which are recorded when purchase contracts close, account for more than 90 percent of the residential market. New home purchases comprise about 7 percent of the market.
The median price of an existing home rose 6.2 percent in January from the same period a year earlier, to $199,600, the NAR report showed.
Increases of this size, three time the average wage gains and inflation, both running about 2 percent are probably due to a lack of supply, said Lawrence Yun, NAR chief economist, at a news conference today after the figures were released. This is not a “healthy” sign, he said.
The number of previously owned homes for sale in Jnauary fell 0.5 percent to 1.87 million. At the current sales pace, it would take 4.7 months to clear the market compared with 4.4 months at the end of December. A five months’ supply or less is considered a tight market, by the NAR.
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