There was more good news from the National Association of Realtors® (NAR) on Wednesday as they reported that the sales of existing homes rose in January, marking three months out of the last four where sales improved.  Inventories of homes for sale were also improved and NAR disputed the need for a program to rent foreclosed properties

Total sales of existing homes including single family houses, condominiums, and cooperative apartments, increased 4.3 percent to an annual, seasonally adjusted rate of 4.57 million units during the month compared to a downward revised rate of 4.38 million in December and are 0.7 percent above what NAR described as a "spike" in the rate in January 2011.  December 2011 sales were originally estimated at a rate of 4.61 million.

The median price of all property types was $154,700 in January, an annual decrease of 2.0 percent.  Foreclosed properties accounted for 22 percent of all sales and short sales for 13 percent.  The total distressed sales were down 3 percentage points from the 35 percent reported in December and 5 percentage points lower than those sales one year earlier.  

Sales of existing single-family homes rose 3.8 percent to 4.05 million from 3.90 million in December and are 2.3 percent higher than the 3.96 million pace in January 2010.  The median price of a single-family home was $154,400 in January, down 2.6 percent from a year earlier.

Condominium and co-op sales jumped 8.3 percent to 520,000 from 480,000 in December but remained10.3 percent below the 580,000-unit level in January 2011.The median existing condo price was $156,600, up 2.0 percent from the year before.

Total housing inventory at the end of January fell 0.4 percent to 2.31 million existing homes available for sale, which represents a 6.1-month supply at the current sales pace, down from a 6.4-month supply in December.  Total unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 20.6 percent below a year ago. 

Lawrence Yun, NAR chief economist, said strong gains in contract activity in recent months show buyers are responding to very favorable market conditions.  "The uptrend in home sales is in line with all of the underlying fundamentals - pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents."

 "The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers," he said.  "Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets.  A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time."

All-cash sales were unchanged at 31 percent in January; they were 32 percent in January 2011.  Investors, who account for the bulk of cash transactions, purchased 23 percent of all homes in January compared to 21 percent in December but unchanged from a year earlier.  First-time buyers accounted for 33 percent of sales in January compared to 31 percent in December and 29 percent in January 2011.

Forty-seven percent of NAR members report that contracts settled on time in January; 21 percent had delays and 33 percent experienced contract failures.  Contract cancellations are unchanged from December but were only 9 percent in January 2011; they are caused largely by declined mortgage applications and failures in loan underwriting from appraisals coming in below the negotiated price.

Sales were up in every region but prices were down.  In the Northeast existing home sales were up 3.4 percent month-over-month and 7.1 percent year-over-year to an annual rate of 600,000 but the median price of $225,700 was 4.2 percent lower than a year earlier.

Sales in the Midwest were at a pace of 980,000, 1.0 percent higher than December and 3.2 percent higher than one year earlier but the median price declined 3.9 percent to $122,000.

In the South, sales rose 3.5 percent from December to 1.76 million in January but are unchanged from a year ago while the median price declined a slight 0.3 percent to $134,800 on an annual basis.

Existing-home sales took a healthy 8.8 percent month-over-month jump in the West to a 1.23 million annual pace but are 3.1 percent below a spike in January 2011.  The median price in the West was $187,100, down 1.8 percent from a year ago.