Total existing home sales sank 5.1% in January to a seasonally adjusted annual rate of 4.62 million, down from December’s rate of 4.87 million. That’s also 5.1% lower than the pace in January of 2013. Last month saw the lowest level of activity since July of 2012, according to the NAR.
“Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception,” NAR Chief Economist Lawrence Yun said. “Some housing activity will be delayed until spring. At the same time, we can’t ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates. These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impact.”
NAR President Steven Brown said higher flood insurance rates were also impacting the market in flood zones, which accounted for about 8% to 9% of sales.
“Thirty percent of transactions in flood zones were cancelled or delayed in January as a result of sharply higher flood insurance rates,” Brown said. “Since going into effect on October 1, 2013, about 40,000 home sales were either delayed or canceled because of increases and confusion over significantly higher flood insurance rates. The volume could accelerate as the market picks up this spring.”
Existing-home prices continued to rise. The median price for all types of existing homes in January was $188,900, up 10.7% from January 2013. Foreclosures and short sales accounted for 15% of sales last month, up from 14% in December and 24% from January 2013.
Inventory was up in January, rising 2.2% to 1.9 million existing homes for sale. That’s a 4.9-month supply at the current pace, up from a 4.6-month supply in December, according to the NAR.
Existing home sales fell last month to their lowest level in a year and a half, according to data released by the National Association of Realtors.