Tight Inventories Limit Home Sales, Push Prices Up
Realtors sold 4.65 million previously owned homes in 2012, according to preliminary estimates, up 9.2% from the year prior and the highest in five years.
The National Association of Realtors also reported on Tuesday that existing-home sale prices rose 6.3% during 2012 to $176,600.
NAR chief economist Lawrence Yun expects sales and prices will be higher at the end of 2013.
“The number of potential buyers who have stayed on the sidelines accumulated during the recession. But they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth,” Yun said.
Tuesday’s report shows that existing-home sales slipped 1% in December after a 4.8% rise in November.
Sales of condominiums, cooperatives and single-family homes fell to a 494,000 annual rate in December from a 499,000 rate in November.
Sales rose in the Northeast and West and fell in the Midwest and South during December.
While existing single-family home sales fell 1.4% in December from the prior month, condo and co-op sales were up 1.7% from the seasonally adjusted annual rate in November.
NAR economists estimate condo/co-op sales totaled 528,000 in 2012, up 10.7% from the prior year. Single-family sales hit 4.13 million in 2012, up 9% from the prior year.
Realtors also reported that the inventory of existing homes for sale fell to the lowest level since 2005. There were 1.82 million units for sale in December, which represents a 4.4-month supply of existing homes at the current sales rate.
“Tight inventory and restrictive mortgage underwriting standards are limiting sales,” Yun said.
IHS Global Insight economist Patrick Newport noted that inventories are “lean and dropping because builders are not building enough homes. That is why home prices are rising in most markets today. Higher home prices, in turn, are bringing more builders into the game,” he said.