Existing home sales in the U.S. dropped for the third consecutive month, reaching the lowest level in a year-and-a-half, according to the National Association of Realtors.
Total existing home sales in January dropped 5.1 percent to a seasonally adjusted annual rate of 4.62 million from the 4.87 million sold in December. The January figure was 5.1 percent lower than the 4.87 million-unit pace in January 2013. The activity for last month was the slowest since July 2012.
"Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception," Lawrence Yun, NAR chief economist, said in the report. "Some housing activity will be delayed until spring. At the same time, we can't ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates. These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impact."
In addition to bad weather, home sales were negatively affected by higher flood insurance rates in markets designated as flood zones, which account for about eight to nine percent of sales.
"Thirty percent of transactions in flood zones were cancelled or delayed in January as a result of sharply higher flood insurance rates," NAR president Steve Brown said. "Since going into effect on October 1, 2013, about 40,000 home sales were either delayed or canceled because of increases and confusion over significantly higher flood insurance rates. The volume could accelerate as the market picks up this spring."
According to the report, Congress is considering legislation to halt the new flood insurance rates so a study can determine the full impact of the law.
Ongoing inventory shortages continue to drive home price increases. The median existing-home price in January was $188,900, increasing 10.7 percent from last year. The increasing home prices seem to be keeping first-time home buyers at bay.
In January, first-time home buyers represented 26 percent of all purchases, down from 27 percent in December and 30 percent in January 2013. This is the lowest market share since NAR began tracking in October 2008; the market share should be closer to 40 percent, NAR says.
More from the report:
All-cash sales comprised 33 percent of transactions in January, up from 32 percent in December and 28 percent in January 2013. Individual investors, who account for many cash sales, purchased 20 percent of homes in January, compared with 21 percent in December and 19 percent in January 2013. Seven out of 10 investors paid cash in January.
Single-family home sales fell 5.8 percent to a seasonally adjusted annual rate of 4.05 million in January from 4.30 million in December, and are 6.0 percent below the 4.31 million-unit pace in January 2013. The median existing single-family home price was $188,900 in January, up 10.4 percent from a year ago.
Existing condominium and co-op sales were unchanged at an annual rate of 570,000 units in January, and are 1.8 percent above a year ago. The median existing condo price was $188,700 in January, which is 13.0 percent above January 2013.
Regionally, existing-home sales in the Northeast declined 3.1 percent to an annual rate of 620,000 in January, and are also 3.1 percent below January 2013. The median price in the Northeast was $241,100, up 6.6 percent from a year ago.
Existing-home sales in the Midwest dropped 7.1 percent in January to a pace of 1.04 million, and are 8.8 percent below a year ago. The median price in the Midwest was $140,300, which is 7.6 percent higher than January 2013.
In the South, existing-home sales declined 3.5 percent to an annual level of 1.95 million in January, but are 1.6 percent higher than January 2013. The median price in the South was $161,500, up 9.4 percent from a year ago.
Existing-home sales in the West dropped 7.3 percent to a pace of 1.01 million in January, and are 13.7 percent below a year ago. Sales in the West are attenuated by tight inventory in many areas, pushing the median price to $273,500, up 14.6 percent from January 2013.