December existing-home sales rise 1%

December sales were below sales a year earlier, but 2013's total was the highest since 2006.

Existing-home sales rose slightly in December, but the market lost momentum and inventories of homes for sale tightened.

December existing-home sales rose 1% from November to a seasonally adjusted annual rate of 4.87 million, the National Association of Realtors said Thursday.

That was below analyst expectations of 4.9 million and marked the second month in a row that sales posted a year-over-year drop. December sales were down 0.6% from a year ago, NAR says.
November's rate was also revised down to 4.82 million.

For all of 2013, sales were 5.09 million, up 9% from 2012, the strongest showing since 2006.

"We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory," says Lawrence Yun, NAR chief economist. Still, he says the year ended at a pace close to normal given the size of the population.

Housing inventories are still tight at a 4.6-month supply, NAR said, down from a 5.1-month supply in November. Typically, Realtors consider a six-month supply to be a balanced market.
Inventory typically falls in the winter, but December's was the lowest level in seven months, even with seasonal adjustments, says Jed Kolko, Trulia chief economist.

"That's tough news for buyers hoping to have more homes to choose from this spring," Kolko says.

Increasing home prices should bring out more sellers this year, but tight inventory will remain a "headwind" for the spring housing season, he says.

Existing-home sales figures reflect completed sales of single-family homes as well as townhomes, condominiums and co-ops.

Single-family home sales rose 1.9% in December from the month before but were also below last year's level.

The slowdown in momentum has been seen in previously hot markets, local market watchers say.

Fewer investor buyers are part of the reason, says Mike Orr, Phoenix real estate expert at the W.P. Carey School of Business at Arizona State University.

In that market, investor buyers are now accounting for about half as many sales as they did a year ago, Orr says. Meanwhile, regular buyers are "not coming to the game as strongly as they used to," he says.

Phoenix single-family home prices were up 15% in November year over year, CoreLogic data show.

Given higher prices and interest rates, Orr expects a more subdued market this year, driven more by employment growth and young buyers vs. investors.

Home buyers are also finding less competition for homes in Southern California's Inland Empire, says Paul Reid, agent with brokerage Redfin.

While well-priced homes typically drew 15 to 20 offers this time last year, two or three are more common now, he says.

"Buyers are feeling a lot more confident negotiating," Reid says. Single-family home prices in that market are up 23% year over year, CoreLogic says.

While currently "lackluster," U.S. home sales should improve in the coming months given a stronger economy and better employment numbers, says Robert Curran, managing director for Fitch Ratings. Fitch expects existing home sales this year to hit 5.16 million.

Article curated from USA Today