Existing home sales edged up in January due to a developing seller’s market and a steady increase in home prices above year ago levels, according to the National Association of Realtors.
Total existing home sales increased 0.4% to a seasonally adjusted annual rate of 4.92 million in January 2013, up from 4.90 million in December and up 9.1% from 4.51 million units last year.
Tight inventory continues to be a major factor in the market, said Chief Economist Lawrence Yun at NAR.
"Buyer traffic is continuing to pick up, while seller traffic is holding steady," he said. "In fact, buyer traffic is 40% above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We've transitioned into a seller’s market in much of the country."
Total housing inventory fell 4.9% to 1.74 million existing homes available for sale at the end of January, representing a 4.2-month supply, down from 4.5 months a month earlier. This is the lowest housing supply since April 2005.
Listed inventory is 25.3% below year ago levels, while raw unsold inventory is at the lowest level since December 1999 when there were 1.71 million homes on the market.
"We expect a seasonal rise of inventory this spring, but it may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth," Yun said.
The national median existing-home price was $173,600, up 12.3% from last year, marking the eleventh month in a row of year-over-year price increases, which last occurred from July 2005 to May 2006, the report noted.
Distressed homes accounted for 23% of January sales, down from 24% in December and down from 35% last year. About 14% of January sales were foreclosures and 9% were short sales.
President Gary Thomas at NAR said that homes are selling at a faster pace.
"The typical home is selling nearly four weeks faster than it did a year ago," he said. "In this environment, Realtors can help buyers strike a balance between moving quickly and protecting their interests, such as making offers contingent upon a satisfactory home inspection and obtaining a loan; of course, a loan pre-qualification may help too."
The median time on market for all homes was 71 days in January, down from 73 days in December and is 28.3% below 99 days from last year.
First-time buyers accounted for 30% of purchases in January, unchanged from last month.
Additionally, single-family home sales increased 0.2% to a seasonally adjusted annual rate of 4.34 million, up from 4.33 million a month earlier, and up 8.5% above the 4 million units last year. Also, the median existing single-family home price was $174,100, up 12.6% from a year ago.
Sales rose in every region but the West, which continues to be constrained by limited inventory, the report noted.
Existing-home sales increased the most in the Northeast, up 4.8% to an annual rate of 650,000, and up 12.1% from last year. The median price in the Northeast was $230,500, up 2.4% from a year ago.