Home Resales Climb Higher

"Sales of previously owned homes in the U.S. rose last month to the highest level in nearly two years, and the inventory of unsold homes contracted to a level considered healthy by economists, positive signs for the housing market.

Existing-home sales increased 4.3% in January from a month earlier to a seasonally adjusted annual rate of 4.57 million, the National Association of Realtors said Wednesday. It was the third increase in the past four months and the highest level of sales since May 2010, when the housing market was lifted by federal tax credits. Compared with January a year ago, sales rose 0.7%.


Economists were generally encouraged by the report, which comes amid other signs that the housing market may have bottomed and is starting to heal. "We're slowly improving for the right reasons: more jobs, more credit availability and affordability of homes," said Stuart Hoffman, chief economist with PNC Financial Services Group.

Guy Berger, U.S. economist with RBS Capital Markets, wrote that some of the recent growth in home sales may have been the result of the mild winter. "But for the most part, it seems that the housing sector may have turned the corner," he wrote.

Some economists, however, said January's report wasn't as encouraging as it appeared because the size of the gain was due to a large downward revision in December's data. The revised reading for December was 4.38 million compared with an earlier estimate of 4.61 million.


"The number of sales in January was actually a touch lower than we had thought they were in December," wrote Paul Diggle, property economist at Capital Economics. Nevertheless, he said, "it's still the case that existing home sales are recovering, albeit only gradually."

Last month's median sales price was $154,700, down 2% from $157,900 a year earlier. The inventory of previously owned homes listed for sale fell to 2.31 million at the end of January, the lowest level since March 2005. That represented a 6.1-month supply at the current sales pace, a level economists consider healthy.

The Realtors' report said home sales rose last month from a month earlier in all four U.S. regions. Sales were up 8.8% in the West, 3.5% in the South, 3.4% in the Northeast and 1.0% in the Midwest.

The housing market has been one of the weakest parts of the U.S. economy, but there are signs it is starting to recover after a price collapse that began 5½ years ago. In 2011, about 4.26 million homes were sold, up 1.7% from 4.19 million in 2010." [Read more]