Home Sales Figures Released For January 2011- By: Karim El Sheikh
The National Association of Realtors has begun releasing statistics for home sales in January, and the figures have been met with mixed reviews. Sales of previously owned homes rose nearly 3% from December, an unexpected increase, but the figure still places home sales at a much lower rate than what is needed for stability. The new figures, after being adjusted for the time of year, have home sales at 5.37 millions homes changing hands per year. This is still below the golden figure of 6 million, which economists say must be maintained for a stable housing market.
Another disturbing figure that was released was the number of first-time home buyers. This classification of buyers dropped 30%, a devastating hit to the market. Market analysts have stated that this group of buyers must comprise of 40% or more of home sales to have a good real estate market.
Many in the industry believe that the drop in first-time buyers is due to the changes in the mortgage industry. Prior to the housing crisis, many first-time buyers could purchase a home with little or no money down on the property. Now banks are requiring 20% or more down on a home and credit and employment standards have become stricter. These new standards have made it more difficult to qualify for a home.
During January 37% of all sales that were completed were on distressed properties. In places with extremely high foreclosure rates, distressed properties accounted for over half the sales. These sales are generally made to investors that pay cash for the property. Because of this factor, the real amount of sales that have taken place is hard to gauge.
The NAR also reported that home prices fell again in January, nearly 3% lower than they were the previous January. Current prices are comparative to prices found a decade ago. Prices have continued to be pushed downward by the continuing influx of foreclosed properties on the market. With 2011 anticipated to have the most foreclosure proceedings on record, many potential buyers are holding out for the market to drop some more.
Mortgage applications have dropped to an all time low. The mortgage industry has not seen figures so low in 15 years. Rising interest rates combined with continuing high unemployment and low consumer confidence has many experts believing it could be several years until the housing market sees real recovery.
2010 saw less than 5 million homes sold for the entire year. The National Association of Realtors stated this was the lowest figure they have seen in 13 years. CoreLogic, a real estate data reporting firm in California has stated they believe the NARís figures were inflated, and that there were only 3.3 million sales in 2010, a figure that is nearly devastating to the industry.
There is currently a gluttony of homes available on the market. Using the newest figures, there is nearly an 8 month supply of available homes on the market. When you consider the large amount of homes that are in the process of being foreclosed upon right now, those figures jump considerably. To have a healthy market you need 6 months or less of available inventory.
Other figures that were released in the January report show that the largest increase in home sales occurred in the Western part of the United States. Western states saw an 8% increase in sales in January, followed by the South at 3.6% and the Midwest at nearly 2%. Sales actually dropped by nearly 5% in the North Eastern states. Condominiums saw the largest increase in sales, jumping nearly 5% in January. Single family homes increased by nearly 3%. Figures have not been released regarding new home starts.
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