Feb
28

Home Sales Start Year Off With a Bang

February 28, 2011

January’s existing-home sales rose for the third straight month and at a better-than-expected rate. If that continues, it could mean a turn for the housing market.

According to the National Association of Realtors (NAR), the pace of 5.36 million U.S. existing-home sales in January is higher than the group’s annual forecast for 2011.

sold signIn fact, sales not only increased 2.7 percent in January from December but are 5.3 percent above the 5.09 million level in January of 2010.

That’s the first time in seven months that sales activity was higher than a year ago.

If contract activity remains at that rate, there could be an at least 8 percent increase in the total sale of existing homes this year.

“The broad fundamentals for a housing recovery are developing,” said Lawrence Yun, NAR chief economist. “Job growth, high housing affordability and rising apartment rent are conducive to bringing more buyers into the market. Some buyers may be looking to real estate as a hedge against potential future inflation.”

To gauge the future, the NAR on Monday released the Pending Home Sales Index, which measures contracts, not closings.

The index was 88.9 based on contracts signed in January; a 2.8 percent decline from 91.5 in December.

But January’s index was only 1.5 percent below the 90.3 level in January 2010, and that’s when the tax credit stimulus was spurring activity.

“The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market,” said Yun.

“We should not expect the recovery to be in a straight upward path — it will zig-zag at times.”

Categories: Economy

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