A shortage of homes on the market is holding down sales of existing homes which did rise but not by much in January, up 0.4 percent to a slightly higher-than-expected annual rate of 4.92 million. December's rate is revised slightly lower to 4.90 million. Supply on the market is at 4.2 months at the current sales rate which is down sharply from 4.5 and 4.8 months in the two prior months and is the lowest rate since the bubble days of 2005. The actual number of homes on the market, at 1.74 million, is the lowest in 14 years.
Low supply is good for prices -- but apparently not in January based on this report where both the median price, at $173,600, and the average price, at $221,000, show nearly mid-single digit monthly percentage declines. Nevertheless, year-on-year price growth remains very convincing, in the low double digits.
The sales gain in January is led by condos, up a monthly 1.8 percent, with single-family sales flat at a gain of 0.2 percent. Regional data show sales gains in the Northeast, Midwest, and South with the West, where inventory is tightest, showing a decline. Year-on-year rates are all in the low to mid double digits except, once again, in the West where sales are down 5.7 percent.
The National Association of Realtors says the story of housing is supply, the result they believe of tight credit which is holding down sales and new building. The housing sector was billed as the big story for 2013 but early data, including this report and Tuesday's housing market index, point to a slow start. New home sales for January will be posted next week.
Existing home sales were down 1.0 percent in December, but followed a 4.8 percent surge in November. December's annual rate of 4.94 million was still up 12.8 percent on a year-ago basis. Supply was severely constrained at 4.4 months at the current sales rate versus 4.8 months in November and compared to 6.4 months in December 2011. Low supply may be bad for sales but it is good for prices which rose 0.8 percent in the month to a median $180,800. The year-on-year gain in the median price, at 11.5 percent in December, trended in the low double digits through the fourth quarter.