Posted on Monday, 21st February 2011 by Charlotte W
Existing home sales rose for a third consecutive month in January, rising 2.7 percent on the strength of investors snapping up bargains in distressed properties.
January’s annual rate of 5.36 million home sales also represented a 5.3 percent annual gain over January 2010 figures, the first time in seven months that sales figures have exceeded those from one year earlier. The figures were released today by the National Association of Realtors (NAR). “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” said Lawrence Yun, NAR chief economist. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.” Investors accounted for 23 percent of all sales in January, up from 20 percent in December and from 17 percent one year earlier. All-cash sales made up nearly a third of the January total, 32 percent of all sales, compared to 29 percent in December and 26 percent in January 2010. It’s the highest percentage of all-cash sales reported since the NAR began tracking the figure in October 2008, when they made up only 15 percent of all sales. The average for all of 2009 was 20 percent. “Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand,” Yun said. “With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes.” The rise in investor purchases and cash sales could be a sign that investors believe that home prices are bottoming out and that demand for housing will soon increase. Consumer confidence appears to be on the rise, with the Commerce Board reporting on Tuesday a 5.6 point increase in its Consumer Confidence Index to 70.4 in February, the highest level in three years.
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Tags: Existing Home, Existing Home Sales, Home Sales, Sales
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