January Existing-Home Sales Ease

WASHINGTON, February 27, 2006

Sales of existing homes were down in January while home prices continued to appreciate at double-digit rates, according to the National Association of Realtors®.

Total existing-home sales -- including single-family, townhomes, condominiums and co-ops -- declined 2.8 percent to a seasonally adjusted annual rate¹ of 6.56 million units in January from an upwardly revised pace of 6.75 million in December. Sales were 5.2 percent below the 6.92 million-unit level in January 2005.

David Lereah, NAR's chief economist, said sales are tracking the trend in the association's Pending Home Sales Index. "Our leading indicator, based on pending sales, has been trending down since hitting a record last August," he said. "In the wake of interest rates peaking in November, I expect we are in a bit of a trough that may be followed by a modest rise and then a general plateau in the level of sales activity. Existing-home sales should stay below the record levels experienced over the last two years, but they'll maintain a historically high pace."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.15 percent in January, down from 6.27 percent in December; the rate was 5.71 percent in January 2005. In November, the 6.33 percent fixed rate was the highest in over three years.

The national median existing-home price² for all housing types was $211,000 in January, up 11.6 percent from January 2005 when the median was $189,000. The median is a typical market price where half of the homes sold for more and half sold for less.

NAR President Thomas M. Stevens from Vienna, Va., said home prices continue to show the long-term effects of tight supply. "Although housing inventory levels have been improving, it is far from being a buyer's market in most of the country and we see the momentum of double-digit appreciation being sustained in home prices," said Stevens, senior vice president of NRT Inc.
"Even when home sales slow, they still supply solid returns. The longer you own, the bigger the gain."

View Existing Home Sales Data

Total housing inventory levels rose 2.4 percent at the end of January to 2.91 million existing homes available for sale, which represents a 5.3-month supply at the current sales pace.

Single-family home sales dipped 1.5 percent to a seasonally adjusted annual rate of 5.77 million in January from an upwardly revised 5.86 million in December, and were 4.8 percent lower than the 6.06 million-unit pace in January 2005. The median existing single-family home price was $210,500 in January, up 13.1 percent from a year earlier.

Existing condominium and cooperative housing sales declined 10.6 percent to a seasonally adjusted annual rate of 791,000 units in January from an upwardly revised level of 885,000 in December. Last month's sales activity was 7.8 percent below the 858,000-unit pace in January 2005. The median existing condo price³ was $216,900 in January, up 5.5 percent from a year ago.

Regionally, existing-home sales in the South rose 2.6 percent in January to a level of 2.75 million, and were 1.9 percent higher than a year ago. The median price in the South was $178,000, up 5.3 percent from January 2005.

Total existing-home sales in the West declined 3.5 percent to a pace of 1.37 million in January, and were 14.4 percent below January 2005. The median existing-home price in the West was $310,000, up 11.5 percent from a year ago.

In the Midwest, existing-home sales dropped 7.7 percent to an annual pace of 1.44 million in January, and were 3.4 percent below a year earlier. The median price in the Midwest was $167,000, up 12.1 percent from January 2005.

Existing-home sales in the Northeast fell 10.0 percent to annual sales rate of 990,000 units in January, and were 13.2 percent lower than January 2005. The median price in the Northeast was $253,000, which is 9.5 percent higher than a year ago.

The National Association of Realtors^®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.

¹The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.

Minor revisions have been made to monthly seasonally adjusted annual sales rates for 1999 through 2005. Each February, NAR Research incorporates a review of seasonal activity factors and fine-tunes historic data based on the most recent findings. Normally, revisions are for the past three years, but these include some adjustments back to the benchmark year of 1999.

Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample -- nearly 40 percent of multiple listing service data each month -- and typically are not subject to large prior-month revisions.

²The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.
³Because there is a concentration of condos in high-cost metro areas, the national median condo price is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.

Existing-home sales for February will be released March 23. The next Pending Home Sales Index will be on March 6 and the forecast will be revised March 13.