Month's housing resales speed up

Pace in January fastest since 2007

This Dec. 7, 2016 file photo shows a house for sale, in Hialeah, Fla.
This Dec. 7, 2016 file photo shows a house for sale, in Hialeah, Fla.

WASHINGTON -- Americans shrugged off rising mortgage rates and bought previously owned homes in January at the fastest pace since 2007. That has set off bidding wars that have pushed up prices as the supply of available homes has dwindled to record lows.

Home sales rose 3.3 percent in January from December to a seasonally adjusted annual rate of 5.69 million, the National Association of Realtors said Wednesday.

Steady job gains, modest pay raises and rising consumer confidence are spurring healthy home-buying even as borrowing costs have risen since fall. Some potential buyers may be accelerating purchases to get ahead of any further increases in mortgage rates. With few homes available for sale, buyers are pressured to close deals rapidly as they find suitable properties.

The typical house for sale was on the market for just 50 days last month, compared with 64 days a year ago. Strong demand is pushing up median home prices, which jumped 7.1 percent from a year earlier to $228,900.

Just 1.69 million homes were on the market nationwide in January, near the lowest level since records began in 1999. It would take just 3.6 months to deplete that supply at the current pace of sales, matching a record low reached in December. Supply is usually equal to about six months of sales in a balanced housing market.

The supply crunch likely will get worse during the spring, economists said, as demand typically rises by more than supply during that time.

"The level of inventories could be a much bigger challenge moving into much higher sales in the spring and summer," said Ted Wieseman, an economist at Morgan Stanley.

That, combined with higher mortgage rates, soon could restrain sales.

"We are a bit less gloomy about housing than a couple of months ago, but sales will not continue to rise at their recent pace," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

The bulk of the stronger buying is occurring among higher-priced properties, the National Association of Realtors said. Sales for homes and condominiums priced at $100,000 and below fell nearly 10 percent in January compared with a year earlier. They rose slightly in the $100,000 to $250,000 bracket and jumped by roughly 20 percent in homes priced at higher levels.

Last year, low mortgage rates helped offset rising home prices. Now, both are rising.

Mortgage rates have climbed since the presidential election. Investors are anticipating that tax cuts, deregulation and infrastructure spending will accelerate growth and push up inflation. That has caused investors to cut back on their bond holdings, pushing up yields.

The average rate for a 30-year fixed mortgage was 4.15 percent last week, according to mortgage buyer Freddie Mac, the Federal Home Loan Mortgage Corp. While that has dipped since earlier this month, it is much higher than last year's average rate of 3.65 percent.

"Rates have risen, but despite that, there is tremendous resilience from consumers wanting to buy a home," Lawrence Yun, chief economist at the National Association of Realtors in Washington, told reporters as the data were released. "The problem remains that there is very little inventory."

By some measures, the housing market has fully recovered from the bust that began in 2006. Yet its newfound health is creating its own set of challenges.

January sales rose in three of four regions, including a 6.6 percent increase in the West and a 3.6 percent gain in the South.

First-time buyers accounted for 33 percent of all sales, compared with 32 percent in the previous month.

In high-demand markets, mostly on the West Coast, homes are being purchased after less than a month on the market, according to real estate brokerage Redfin.

Denver was the fastest market last month, Redfin found, with purchase contracts signed 23 days after listing for a typical home, far below the 43 days that was typical a year earlier. Seattle was the second-fastest, with 26 days on the market, followed by Oakland, Calif., at 27 days.

The strength in sales should lift growth going forward, as new homeowners purchase furniture and appliances, and spend more on landscaping and outdoor equipment. Home sales also tend to spur renovations, which help to update aging properties and generate additional construction work for the broader economy.

Information for this article was contributed by Christopher S. Rugaber and Josh Boak of The Associated Press and by Patricia Laya and Chris Middleton of Bloomberg News.

Business on 02/23/2017

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