Sales of previously owned U.S. homes increased in January, showing more momentum for the industry coming off its best year since 2007.
Purchases of existing houses, tabulated when a contract closes, increased 0.4% to a 4.92 million annual rate, figures from the National Association of Realtors showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg called for a 4.9 million pace. The number of available properties slumped to the lowest level since 1999.
A sustained pickup in housing will depend on faster progress in the labor market, fewer foreclosures and easier access to credit. Mortgage rates close to all-time lows and the prospect of firming prices are luring buyers at the same time the inventory of homes shrinks and limits bigger gains in sales.
“It’s a good start to the year,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities Inc. in New York, who projected a 4.9 million rate. “Incomes continue to rise, interest rates are low and inventory is lean. The outlook is improving.”
Stocks held losses after the figures on concern Federal Reserve policy makers will scale back economic stimulus. The S&P 500 decreased 0.5% to 1,504.74 at 10:27 a.m. in New York.
Estimates in the Bloomberg survey ranged from 4.7 million to 5.1 million. The prior month’s pace was revised to 4.9 million from a previously reported 4.94 million.
Today’s report includes the Realtors group’s annual revisions to sales and months’ supply data from 2010 through 2012. Some 4.66 million previously owned houses were sold last year, the most since 2007.
Other data showed more Americans filed applications for unemployment benefits last week, returning to levels seen prior to the holiday period and indicating little change in the pace of firings. Jobless claims increased by 20,000 to 362,000 in the week ended Feb. 16, the Labor Department reported today in Washington.
The agency also said that its consumer-price index was unchanged for a second month in January. The so-called core measure, which excludes more volatile food and energy costs, increased 0.3%, the most in more than a year and pushed up by gains in clothing, hotel rates and airline fares.
Another report showed manufacturing in the Philadelphia region unexpectedly contracted in February for a second month. The Federal Reserve Bank of Philadelphia’s general economic index dropped to minus 12.5, the lowest reading since June, from minus 5.8 in January. Readings lower than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
The median price of an existing home rose 12.3% to $173,600 last month from January 2012, today’s Realtors’ report showed.
The number of previously owned homes on the market fell 4.9% to 1.74 million, the fewest since December 1999. At the current sales pace, it would take 4.2 months to sell those houses, the shortest time since April 2005, compared with 4.5 months at the end of the prior month.
Months’ supply around 6 months is consistent with stable home prices, the group has said.
“Inventory has increasingly become the story of the housing market,” Lawrence Yun, NAR chief economist, said in a news conference as the figures were released. “We do expect some relief in inventories as the spring season comes around.” He also said that “only the homebuilders can truly relieve the inventory” shortage, he said.
Of all purchases, cash transactions accounted for about 28%, compared with 29% in December. Investors, who account for most cash sales, purchased 19% of homes in January, down from 21% a month earlier.
Distressed sales, comprised of foreclosures and short sales, in which the lender agrees to a transaction for less than the balance of the mortgage, accounted for 23% of the total, down from 35% a year ago.
Sales of existing single-family homes increased 0.2% to an annual rate of 4.34 million. Purchases of multifamily properties -- including condominiums and townhouses -- rose 1.85 to a 580,000 pace.
Purchases climbed in three of four regions, led by a 4.8% gain in the Northeast. Demand increased 3.6% in the Midwest and 1% in the South.
Existing-home sales, tabulated when a contract closes, have recovered since reaching a 13-year low of 4.11 million in 2008. The market peaked at a record 7.08 million in 2005. Resales accounted for about 93% of the residential market in 2012.
The strength in demand has bolstered demand for new properties as well. PulteGroup, Lennar Corp. and D.R. Horton Inc., the top three U.S. homebuilders by market value, said orders rose in the most recently reported quarter.
A report yesterday from the Commerce Department showed single-family home starts increased in January to the highest level since July 2008. Total housing starts dropped to an 890,000 rate, restrained by a drop in construction of multifamily dwellings.
This year will probably show “at least 950,000 housing starts, probably closer to 1 million, based upon what we have seen so far in terms of order rates as well as permitting activity,” Gregory Hayes, chief financial officer at United Technologies Corp., said at a Feb. 7 conference. The Hartford, Connecticut-based company’s products include Carrier air conditioners and Otis elevators.
“If housing starts really do pick up as we expect and the economy picks up as we expect, I think what you’ll see is pretty good growth in the residential business” that includes Carrier air conditioners, Hayes said.
Property purchases are more affordable for those who can get credit. The average fixed rate on a 30-year loan held at 3.56% in the week ended Feb. 21, down from 3.95% a year ago, according to McLean, Virginia-based Freddie Mac.
Delinquencies, while still a hurdle to the industry’s rebound, continue to wane. Foreclosure filings fell 28% in January from a year earlier to the lowest level since April 2007, as a new California law slowed first-time defaults in the most-populous state, according to RealtyTrac, an Irvine, California-based data provider.