While sales fell sharply in areas hit hardest by cold winter weather, a decline of 7.3 percent in the West is a clear sign that other housing market forces are affecting sales more.
Chicago, IL (PRWEB) March 04, 2014
The Federal Savings Bank sees home prices skyrocketed in many housing markets throughout the U.S. in 2013, largely due to a low inventory of homes for sale. While prices continue to rise, home sales appear to have stalled in the beginning of 2014, according to the National Association of Realtors.
Existing-home sales fall
The report revealed that existing-home sales released by the National Association of Realtors on February 21st, dropped to their lowest point in 18 months during January, and the extreme winter weather cannot be blamed for the entire slump. Existing-home sales include completed transactions of single-family homes, condominiums, townhomes and co-ops. During the first month of the year, these transactions declined 5.1 percent to an annual rate of 4.62 million units. The annual rate during the previous month and January 2013 was 4.87 million units. The first 2014 rate reported is the slowest sales pace since July 2012, when the annual rate was 4.59 million units.
It is typical for the housing market to notch more real estate transactions during the spring and summer, but there are several other economic factors causing the slowdown than just the weather, NAR reported. While sales fell sharply in areas hit hardest by cold winter weather, a decline of 7.3 percent in the West is a clear sign that other housing market forces are affecting sales more.
"Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception," said NAR Chief Economist Lawrence Yun. "Some housing activity will be delayed until spring. At the same time, we can't ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates. These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impact."
Prices remain positive
While the number of sales was down in January, home prices continued to rise. The national median price for all housing types during the month reached $188,900, a 10.7 percent increase from the previous year. At the same time, mortgage rates moved downward slightly, reaching an average rate of 4.43 percent for a 30-year fixed-rate mortgage in January. The previous average in December was 4.46 percent. While these rates are still relatively low on a historical standard, interest a year ago was just 3.41 percent.
A number of existing-home sales were short sales and foreclosures, though the figure is down considerably from a year ago. In January, 11 percent of sales were foreclosures while 4 percent were short sales. In total, distressed homes accounted for 15 percent of all sales in January, compared to 24 percent during the same time last year.
The reduced number of distressed sales may be a result of the success of the Home Affordable Refinance Program. According to a recent report on February 10th by the HARP.gov website, more than 3 million homes have been able to complete a mortgage refinance. Many of these mortgages would have been in danger of falling into default and foreclosure without the refinance program.
Contact the Federal Savings Bank, a veteran owned bank, to find out more about affordable mortgage options.