Existing-home sales declined in January, with some buyers waiting to see how details of the economic stimulus package would affect them, according to the National Association of Realtors (NAR). At the same time, inventories fell to a two-year low.
Existing-home sales – including single-family, town homes, condominiums and co-ops – fell 5.3% to a seasonally adjusted annual rate of 4.49 million units in January from a level of 4.74 million units in December, and are 8.6% lower the 4.91 million-unit pace in January 2008.
Lawrence Yun, NAR chief economist, said there was understandable hesitation by some home buyers. "Given so much stimulus package discussion in January, some would-be buyers simply sat out for clarity and certainty on the nature of housing stimulus," says Lawrence Yun, NAR's chief economist. "The housing market will soon get a lift from very favorable buying conditions – not only from improved affordability, but also from the stimulus of an $8,000 first-time home buyer tax credit, and higher conforming loan limits that will allow more people to tap into 50-year low mortgage rates."
NAR estimates the impact of the stimulus package and lower interest rates on the housing market to be about 900,000 additional home sales in 2009 compared to conditions before the stimulus package. Inventory is expected to fall below an eight-month supply by year-end, which would be consistent with home price stabilization.
Total housing inventory at the end of January fell 2.7% to 3.6 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace. Because sales were down, the January supply is up from a 9.4-month supply in December.
"The drop in total inventory is an encouraging sign, because the number of homes on the market has declined steadily since peaking in July 2008, and inventory is at the lowest level in two years," Yun says. In January 2007, there were 3.54 million homes for sale.
SOURCE: National Association of Realtors