The sales of previously owned homes reportedly "fell to their lowest rate in nine months" in January, according to the Los Angeles Times. People in the United States purchased 4.82 million houses, the fewest since last April, according to the figures provided by the National Association of Realtors.
Realtors know that January is usually a difficult month for home sales. Apart from its reflection of previous deals sealed during the holiday season, January weather is also a major factor in many regions across the country.
Moreover, the biggest issue is the supply of previously owned houses. The pool of unsold homes remained stagnant at 4.7 months of inventory. This pushed median home prices up by 6.2 percent, year over year, to $199,600.
The demand for homes continued to rise as the number of dwellings in the market dropped. As a result, there was a clear increase in prices which might motivate would-be sellers to put their home on the market.
Lawrence Yun, the chief economist of NAR, attributed this current issue to the decline in the supply of homes put up for sale as well as to the rising prices of the homes in the market today.
Market watchers are now worried about the repercussions of the higher prices, which will either lead to more homeowners listing down their properties this spring or dampened demand especially since they will most likely outstrip wage gains for young, first-time buyers, as reported by Transport Topics.
"We're starting to see big concerns about pricing and affordability," stated Jacob Oubina, senior economist at New York's RBC Capital Markets. "Folks are finding out they are priced out of the market."
It remains unclear if the recently applied mortgage insurance rules provided by the Federal Housing Administration will end up reeling in more first-time buyers into the market. Yun did comment that low mortgage rates will certainly be appealing to new potential buyers and might generate their interest in certain homes, but the lack of new and affordable houses on the market will definitely delay their decisions, according to Hellenic Shipping News.
Despite it all, Patrick Newport, an economist at IHS Global Insight, is convinced that the market will be improving but at a very slow rate. "Existing home sales are taking a bumpy road toward recovery," he said. "But, all is not lost. The overall picture is looking brighter than it did at this time last year."
