Sales of existing homes fell in January to the slowest pace in a year-and-a-half. According to the National Association of Realtors:
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 5.1 percent to a seasonally adjusted annual rate of 4.62 million in January from 4.87 million in December, and are also 5.1 percent below the 4.87 million-unit pace in January 2013.
Severe winter weather and low supply partially accounted for the slowdown.
In the press release, NAR chief economist Laurence Yun cited several concerns for the housing market in 2014, including “tight credit, limited inventory, higher prices and higher mortgage interest rates.”
The median sales price for existing homes rose to $188,900, which was up 10.7% from the previous year. Of the sales, 15% were “distressed,” including 11% foreclosure and 4% short sale.
The SLO County housing market looks a bit different through January. The median price for all January single-family sales (there were 164 of them) was about $467,800, according to Keith Byrd. Compared to January of 2013, the sales price was up over 16%.
SLO County sales activity rose 3.8% from the previous year, reaching the highest January-level since 2005.
The 30-year fixed mortgage rate has jumped nearly 1% from the previous year. The Freddie Mac primary market survey placed the national average of the 30-year fixed at 4.32% by the end of January 2014 and 3.53% by the end of January 2013.
Rates have jumped as the economy slowly improves and the Federal Reserve reduces its stimulus program (quantitative easing – QE). (For more on how mortgage rates move, click here).
Even as the housing market recovers, young, first-time buyers continue to struggle to get into the market.
According to the NAR, first-time buyers accounted for 26% of purchases in January. Typically, first-timers have 40% of the market share.
The “young adult” population has struggled to recover from the recession. Student debt has ballooned to $1.2 trillion in an overwhelmingly disappointing job market (link). In response, young people are tending to stay at home longer and chose rentals over purchases.
The rate at which adults aged 25 to 29 moved between 2012 and 2013 was 23.3%, which is the lowest level since at least 1963, according to the Huffington Post. Homeownership rates among the same age group fell from 40.6% to 34.3% between 2007 and 2012.
Jobs and housing, housing and jobs. As payrolls expand, more people will be able to afford homeownership. In the meantime, we expect modest growth in housing through 2014.
Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call us today at 805.543.LOAN or email firstname.lastname@example.org to set up a free pre qualification. We are The Mortgage Experts: ask us anything!