Existing Home Sales Up 2.7%; Sales Prices Down 3.7% From Year Earlier

In January, existing home sales jumped by 2.7% to an annualized sales pace of 5.36 million units. The increase in sales now brings the pace to the highest rate since last May. Sales have been trending up for the last six months or so following the collapse in sales that occurred after the first time buyer tax credit expired. The 2.7% increase follows a 12.5% jump in December. From a year prior, sales were up 5.3%, the first year-over-year gain since June.

With the increase in sales, the months supply of inventory fell from 8.2 to 7.6, the lowest level in more than a year, yet still quite high historically. The normal long-term inventory supply is around 5 months. Ratios above about 6 to 7 months are historically correlated with short term price declines. Indeed, this has been the trend over the past six months. The median price in January fell 5.9% over the month to $158,800, far exceeding the 0.8% decline in December. The median price is down 3.7% from a year ago. The steep price decline indicates the increased sales were likely driven by distressed properties.

	Jan	Dec	Nov	Oct	Sep	Aug
Sales (mil. annual.)	5.36	5.22	4.64	4.38	4.41	4.24
M/M % Change	2.7	12.5	5.9	-0.7	4	9.8
Med. Price (‘000s)	$158.8	$168.8	$170.2	$170.6	$171.5	$177.4
Y/Y % Change	-3.7	-1.0	0.1	-0.8	-2.5	0.1
Months Supply	7.6	8.2	9.6	10.6	10.9	11.7

Source: National Association of Realtors