Existing Home Sales FELL by 5.1% in January to 4.62 million, compared with market expectations for a decline to 4.67 million. Home re-sales are now 5.1% BELOW their year ago level but they are still 36.3% BELOW their September 2005 record high. The year-over-year rate has now been negative for three months after 28 consecutive months of positive growth.
The Inventory of Homes Available for Sale ROSE by 2.2% to 1,900k, are now 7.3% ABOVE their year ago level but still 7% below its 6-month averages. Foreclosures accounted for 11% of January sales while short sales accounted for 4% with an average discount of 16% and 13% below market value respectively.
Because inventories increased while sales declined, the Months Supply ROSE to 4.9 months from 4.6 months. This is still well BELOW its July 2010 cyclical peak of 12.4 (which was its highest level since 1982) and even BELOW the 6 month level that is considered 'normal'.
Home Prices ROSE compared to their year ago levels. Average home prices are 8.8% ABOVE their year ago levels while median home prices are 10.7% ABOVE their year ago levels. There is a broad general improvement in home prices.
Bottom Line: Existing home sales fell moderately in January to their lowest level since July 2012, suggesting that the trend in housing has now turned negative on a year-over-year basis. Home re-sales have averaged 4.77 million over the past 3 months and 5.05 million over the past 12 months, highlighting the recent softness in the housing market due to the cold weather. Inventories of homes available for sale climbed modestly; and are quite lean relative to sales. That said, inventory levels, which had been falling, are now rising modestly now. Distressed sales inched up by 1% due to an increase in foreclosures, as tax relief on mortgage debt forgiveness ended in 2013. Moreover, higher borrowing costs are also triggering a slowdown in sales.