Rough winter weather across much of the nation at the start of this year apparently did not keep home buyers away.
Contracts to buy existing homes in January rose a strong 4.5 percent from the previous month, according to the National Association of Realtors, which also revised December’s numbers down. That beats expectations of a 1.8 percent gain. Volume is now 9.5 percent above January 2012 and is the highest reading since April 2010. This as closed sales of existing homes, where contracts were signed toward the end of last year, were basically flat.
“Over the near term, rising contract activity means higher home sales, but total sales for the year are expected to rise less than in 2012, while home prices are projected to rise more strongly because of inventory shortages,” wrote Lawrence Yun, chief economist for the Realtors in a release.
The existing home market is faced with a lack of supply of homes for sale, as nearly half of home sales last year were of distressed properties.
Banks have been slow to put foreclosed homes up for sale recently, possibly waiting for prices to improve further. While some expected a surge in inventory once home prices began to improve, that so-called “shadow supply,” has yet to emerge. Prices are rising fast, up nearly 7 percent in December from a year ago in the nation’s twenty largest real estate markets, according to the S&P/Case Shiller Index. But some would-be sellers may be waiting to see just how high prices move in the coming months, while millions of others are still trapped underwater, owing more on their mortgages than their homes are worth.
Mortgage applications to purchase a home fell 5 percent last week from the previous week and is now at its lowest level since the end of last year, according to a Mortgage Bankers Association weekly survey. Applications historically start to pick up around now, as President’s Day weekend marks the unofficial start of the usually busy spring housing season.
Regionally, the Realtors’ Pending Home Sales Index in the Northeast rose 8.2 percent in January and is 10.5 percent higher than January 2012. In the Midwest the index increased 4.5 percent and is 17.7 percent above a year ago. Pending home sales in the South rose 5.9 percent and are 11.3 percent higher January 2012. In the West the index edged up 0.1 percent in January but is 1.5 percent below a year ago. Supplies of homes for sale are most limited in the West, where investors have been buying distressed properties in bulk.