Sales of existing homes in the United States fell 5.1 percent in January, hitting an 18-month-low due to cold weather and limited supply, according to The National Association of Realtors (NAR).
"Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception," Lawrence Yun, chief economist of NAR, said in an official press statement.
Sales of previously owned homes dropped to a seasonally adjusted 4.62 million units for the month of January, the 5.1 percent decrease representing a year-on-year drop.
According to the report, 11 percent of the sales were foreclosures and 4 percent were short sales. Single-family home sales fell 5.8 percent in January while condos and co-op sales remained unchanged.
The report states that first-time buyers accounted for 26 percent of the sales in January, down 1 percent from rates in December to make it the lowest market share since the NAR began monthly measurements in October 2008.
The cold weather was partly responsible for the slip in sales rates, the report suggests, as was a limited supply and high flood insurance rates. According to the report, supply was up only 2.2 percent to 1.90 million units by the end of January.
"Thirty percent of transactions in flood zones were cancelled or delayed in January as a result of sharply higher flood insurance rates," said Steve Brown, president of the NAR. "Since going into effect on October 1, 2013, about 40,000 home sales were either delayed or canceled because of increases and confusion over significantly higher flood insurance rates. The volume could accelerate as the market picks up this spring."
The average 30-year mortgage rate rose to 4.33 percent and the 15-year rates were up to 3.35 percent.
Although home buying was down for the month, affordability was steady. The National Association of Home Builders said that 64.7 percent of the homes were available to medium-income earning families in the fourth quarter.
Although experts say 2014 will be a good year for the real estate market, "some housing activity will be delayed until spring," according to Yun.
