Sales of pre-owned homes dropped 5.3% to a seasonally adjusted annual rate of 4.49 million in January, the lowest sales pace in 12 years, the National Association of Realtors reported Wednesday.
Sales are down 8.6% in the past year, the industry trade group reported. The sales pace in December was unrevised at a 4.74 million annual rate.
Sales in January were lower than the 4.80 million pace expected by economists surveyed by MarketWatch. See Economic Calendar.
Lawrence Yun, the chief economist for the real estate group, said some potential buyers held back in January out of uncertainty about what incentives might be included in the Obama administration's stimulus plan. However, the January report covers sales that closed in January. It typically takes six to eight weeks to close after a contract is signed, so most of those buyers were looking in November or December.
Yun said the $8,000 first-time home buyer tax credit and other measures to stabilize mortgage rates and housing markets would probably boost sales by about 900,000 this year.
About 45% of sales in January involved so-called distressed sales of homes in foreclosure or short-sales by homeowners who sell for less than what they owe, Yun said.
Buyers are flocking to the distressed properties for deeper price discounts, he said.
The median sales price fell to $170,300, the lowest in nearly six years and down 14.8% compared with a year ago. That's the second largest year-over-year price decline on record.
The inventory of unsold homes fell 2.7% in January to 3.6 million, representing a 9.6-month supply at the January sales pace. Inventories generally rise in January; the inventory data are not seasonally adjusted. About a quarter of homes on the market (about 900,000) are distressed properties, Yun said.
"The drop in total inventory is an encouraging sign," Yun said. Inventories are at their lowest level in two years.
The realtors track only homes offered and sold through the multiple-listing service. Many foreclosures are handled through auctions or are being held off the market until prices improve.
Sales of single-family homes dropped 4.7% to a 4.05 million annual rate. Sales of condos fell 10.2% to a 440,000 pace. Sales of single-family homes are down 7.1% in the past year, while sales of condos are down 20.3%.
Sales fell in three of four regions and were unchanged in the West.
