Weather or Not 2014 Existing Home Sales Will Rise — January 2014 Results

If you were traveling as much as I have been since November 2013, then it should be no surprise that both job growth rates and home sales changed since November 2013. After all, to be able to interview for a job or buy a house requires, in most circumstances, that you can get there. Inclement weather across much of the country in December 2013 directly impacted the number of newly signed purchase contracts and ultimately closings.

So it was not a surprise that the National Association of Realtors (NAR) reported that January 2014 home sales were off 5.1 percent when compared to both December 2013 and January 2014, on a seasonally-adjusted annualized rate. January 2014 existing home sales was the least number recorded since July 2012.

On a comparative year-over year basis, the January 2014 median home price was up 10.7 percent at $188,900.

Sales volume and median prices are shown in the attached graph both in a raw form and as a 12-month moving average. The 12-month moving average removes some of the monthly noise from the data and better shows trends.

2-23-14 graph

Other statistics reported in the NAR release included:

  • Cash sales made up 32 percent of all closed transactions compared to 28 percent a year ago
  • The first time homebuyer now accounts for one out of every four sales (26 percent), and notched a new low since NAR commenced monthly measurement in October 2008. NAR believes the old normal is around 40 percent. That may no longer be the same, however, given a more rigorous loan underwriting and qualifying process.
  • Investors bought one out of every five homes sold, and 70 percent of the time paid all-cash
  • Distressed sales tallied 15 percent of all transactions, up from 14 percent sequentially from December 2013, but down significantly from the 24 percent seen one year earlier
  • 4 percent of all sales were short sales transactions, which sold at an average 13 percent less than non-distressed closings
  • Foreclosures made up 11 out of every 100 transactions and had an average price 16 percent less than non-distressed transactions
  • While the median days on the market in January 2014 was 67 days (versus 71 days a year ago), the type of transaction made a large difference. Short sales stayed on the market a 150 day median, foreclosures 58 days, and non-distressed closings 66 days. Almost one-in-three homes (31 percent) closed in January were offered for sale for less than a month.

To read the entire NAR press release and access underlying data sets, click http://www.realtor.org/news-releases/2014/02/existing-home-sales-drop-in-january-while-prices-continue-to-grow

My outlook for housing sales in 2014? I still expect that when weather warms up, likewise will housing sales do the same. I still expect that 2014 existing home sales will be 4 to 6 percent greater than in 2013 by year end. Median prices for 2014 will increase an average 5 to 7 percent. What could derail my outlook? There are a large number of items, but foregoing a mini-recession, and assuming positive job growth, existing home sales should rise.

Ted

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