Sales of previously owned homes in U.S. rose 1% in December

Single-Family Homes

Purchases of single-family homes increased 1.9% to an annual rate of 4.3 million. The sales pace of multifamily properties including condominiums fell 5% to 570,000.

Cash transactions accounted for about 32% of all purchases in December, the report showed.

Sales of distressed property, including foreclosures, accounted for 14% of the total last month, matching the share in November.

First-time buyers accounted for 27% of all purchases in December, the lowest since at least 2008.

“Normal would be closer to 40%,” NAR chief economist Lawrence Yun said at a news conference as the figures were released. “Two opposing forces are at work. One is job creation which is positive factor for housing. But the negative is fast-declining affordability,” due in part to higher prices.

Existing-home sales, which are tabulated when a purchase contract closes, are recovering from a 13-year low of 4.11 million in 2008 after reaching a record 7.08 million in 2005.

December Weather

Sellers faced a hurdle of inclement weather in December. The extent of snow cover in the contiguous U.S. was the eighth- largest on record for the month, according to the National Oceanic and Atmospheric Administration. It also marked the coldest December since 2009, the agency said.

Existing-home sales declined 4.3% in the Midwest and 1.5% in the Northeast, today’s figures showed. They increased 4.8% in the West and 3.6% in the South.

The median time a home was on the market jumped in December to 72 days from 56 days a month earlier as “adverse weather reportedly delayed closings in many areas,” the Realtors group said in a statement.

The housing rebound last year gained traction amid job gains and rising stock values. Residential construction starts soared in November to a five-year high. Sustained demand and a shortage of properties for sale have prompted builders to break ground on more dwellings, and mortgage lenders are reporting fewer delinquencies and healthier portfolios.

Interest Rates

At the same time, higher borrowing costs are triggering a slowdown in sales that has affected mortgage lenders. At JPMorgan Chase & Co., the biggest U.S. bank by assets, home loan applications fell 23% from the previous quarter. Wells Fargo & Co reported originations down 38% at the end of December from three months earlier as demand for refinancing slumped.

At Regions Financial Corp. in Birmingham, Alabama, mortgage production fell last year even as overall lending increased $4.5 billion, about 8%, as people took advantage of low interest rates earlier in 2013.

“Consumer balance sheets are healthier than they’ve been in some time, corporate balance sheets are in solid condition and the housing market in our communities continues to improve,” Chairman and Chief Executive Officer Grayson Hall said on a Jan. 21 earnings call. “These factors, along with an improving global outlook, should contribute to moderate to improving GDP growth in 2014.”

The average 30-year, fixed-rate mortgage was 4.41% for the week ended Jan. 16, compared with 3.38% a year ago, according to Freddie Mac in McLean, Virginia.

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