Sales of previously owned homes hits eight-month high

Meanwhile, median prices dropped to the lowest level in nearly nine years while the sales of foreclosures and other distressed properties reached a 12-month high.

The national median existing-home price for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes were 37 percent of the market share in January, from 36 percent in December and 38 percent in January 2010.

“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,” he said. 

“As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

Total housing inventory at the end of January fell 5.1 percent to 3.38 million existing homes available for sale, a 7.6-month supply at the current sales pace, down from an 8.2-month supply in December. 

The inventory supply is at the lowest level since December 2009, when there was a 7.3-month supply, according to the NAR.

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

“Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “The median price is being dampened by unusual market factors. Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”

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

Another NAR survey shows that first-time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010, when the federal government offered a tax credit.

In a separate report, mortgage applications increased 13.2 percent from one week earlier, according to data from the Mortgage Bankers Association for the week ending Feb. 18. 

The four-week moving average, which smoothes the volatility of the week numbers, is up across the market (1.9 percent), purchase (1.6 percent) and refinance indexes (1.8 percent.) 

“Ongoing turmoil in the Middle East brought interest rates lower last week,” said Michael Fratantoni, MBA’s vice president of research and economics. “Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week.” 

The average interest rate for 30-year fixed-rate mortgages decreased to 5 percent from 5.12 percent, while the rate for 15-year fixed-rate mortgages decreased to 4.28 percent from 4.34 percent, according to MBA.

According to Freddie Mac, the 30-year rate rose to 4.76 percent in January from 4.71 percent in December; the rate was 5.03 percent in January 2010.

According to the NAR report, single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.69 million in January from 4.58 million in December, and are 4.9 percent higher than the 4.47 million level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7 percent from a year ago.

Existing condominium and co-op sales increased 4.7 percent to a seasonally adjusted annual rate of 670,000 in January from 640,000 in December, and are 7.9 percent above the 621,000-unit pace one year ago. The median existing condo price was $154,900 in January, which is 10.2 percent below January last year.

Regionally, existing-home sales in the Northeast fell 4.6 percent, rose 1.8 percent in the Midwest, were up 3.6 percent in the South and made the biggest jump, up 7.9 percent in January.