Housing Prices Decrease as Sales Reach Seven-Month High

Mortgage brokers are finally starting to see hard work pay off: Home sales rebounded in January, reaching the highest level in seven months, the National Association of Realtors said this week.

The unusually warm winter weather helped boost sales, which rose 3 percent. Specifically, single-family homes showed the biggest sales increase, rising 3.5 percent.

However, existing condominiums and cooperative housing sales slipped 0.1 percent. Those sales are stagnant because many more condos and co-ops are available, the NAR said. Despite the dramatic rise in home sales in January, no one should overreact to the gain, analysts say.

“I’m trying to be careful because we could see the next month down a little,” said David Lereah, the NAR’s chief economist. The reason: February winter storms disrupted much of the country, which could cause a near-term home sales dip.

As sales jumped in January, there was a downturn in existing home prices. Last month, prices fell 3.1 percent from January 2006 to $210,600, which follows the logic that buyers will jump on cheaper pieces of property.

The price softness is expected to continue until spring, Lereah said. This should lead to continued mortgage loan activity.

“But that may not be that bad,” said Joel Naroff, chief economist of Naroff Economic Advisors. “The decline in prices is helping sales, but we still have too many homes for sale.”

The inventory of homes for sale rose 2.9 percent at the end of January to 3.55 million, representing a 6.6-month supply. Still, that’s down from the 7.4-month peak in October.

Across the nation, existing home sales in January improved the most in the West, while sales in the Northwest were unchanged. And among states and cities, recent sales have varied. For example, in the Florida housing market, sales fell 27 percent in January.

But the Long Island housing market - along with Boston, Pittsburgh and most of New Jersey - enjoyed solid gains in home sales.

Many experts hope that home sales will continue to improve.

“First-time home buyers are now in a position that they can take their time, and they’re being able to purchase homes,” said Bill Hanley, president of the New Jersey Association of Realtors. Instead of 10 buyers for every home, there are now 10 homes for every buyer, he adds.

At Hanley’s firm, Weichert Realtors in Metuchen N.J., January home sales more than doubled the sales in January a year ago.

SOURCE: USA Today