Purchases of Previously Owned Homes Up One Percent

by on January 23, 2014 4:39 pm BST

Purchases of previously owned homes rose one percent in December, signaling the first increase in five months, to an annualized pace of 4.87 million. This, however, was less than forecasted as home purchases in the Northeast and Midwest fell (again, weather is to blame). The general consensus was 4.87 million homes at an annual pace, and the previous report of 4.90 million was revised down .8 million homes.

In regards to the weather, “we might have seen a stronger increase if it wasn’t for bad weather,” said David Sloan, a senior economist at 4Cast Inc. Nevertheless, 2013 market the strongest year since 2006 with an increase in home buyer confidence. New construction has also began to increase.

Single family homes rose 1.9 percent at an annual rate of 4.3 million. Multifamily homes seen a decline of five percent to a rate of 570,000. Fist-time home buyers only accounted for 27 percent of all purchases in December, the least since 2008. Lawrence Yun, chief economist for the National Association of Realtors, said that there is a double-edged sword. There is positive growth in the labor force, yet the affordability of homes are quickly evaporating with prices and mortgage rates increasing.

Existing-home sales declined 4.3 percent in the Midwest and 1.5 percent in the Northeast, while increasing 4.8 percent in the West and 3.6 percent in the South region.

According to Freddie Mac, the average 30-year fixed-rate mortgage stands at 4.41 percent for the week ending on January 16, an increase of 1.3 percent year-over-year.