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Home Sales Create Another Cause for Concern

There was more bad housing news at the end of last week, again raising questions about the strength of the recovery.

Existing-home sales fell in January but are above year-ago levels, according to the National Association of Realtors.

Existing-home sales - including single-family, townhomes, condominiums and co-ops - dropped 7.2 percent to a seasonally adjusted annual rate of 5.05 million units in January from a revised 5.44 million in December. They remain 11.5 percent above the 4.53 million-unit level in January 2009.

Lawrence Yun, NAR chief economist, said most of the completed deals in January were based on contracts in November and December.

"People who got into the market after the home buyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales," Yun said. "Still, the latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery."

Total housing inventory at the end of January fell 0.5 percent to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, up from a 7.2-month supply in December. Raw unsold inventory is 9.6 percent below a year ago, and is at the lowest level since March 2006.

Home values are starting to firm, Yun said, but it varies by region.

The national median existing-home price for all housing types was $164,700 in January, unchanged from a year earlier. Distressed homes, which accounted for 38 percent of sales last month, distort the median price, Yun said.

There was bad news about new homes last week, too. The Commerce Department reported new home sales fell 11 percent to an annual rate of 309,000 units, from 348,000 in December. It was the lowest rate on record.