Januaryâ€™s home resales moved to a 20-month high â€” additional evidence that the nationâ€™s housing recovery is underway.
According to the National Association of REALTORSÂ®, the January 2012 Existing Home Sales showedÂ 4.57 million units sold last monthÂ on a seasonally-adjusted, annualized basis â€” a 4 percent increase as compared to Decemberâ€™s revised figures.
An â€œexisting homeâ€ is one thatâ€™s been previously occupied and cannot be categorized as new construction.
Beyond the headline numbers, though, there was plenty about which for todayâ€™s Chicago home sellers to get excited. Demand for homes remains strong, foreshadowing higher home prices through 2012.
First, the national housing stock is atÂ a 5-year low.
In January, the number of homes for sale nationwide slipped to 2.31 million, the smallest home inventory since February 2007, and a 21% decrease from just one year ago.
Falling home supply amid constant home demand leads home prices higher. At the current pace of sales, todayâ€™s complete home inventory would â€œsell outâ€ in 6.1 months.Â
Analysts say that a 6-month supply is a market in balance. Anything less is Bull Market territory.
Second, the National Association of REALTORSÂ® says that one-third of all homes under contract â€œfailedâ€ last month. This means that many more buyersÂ triedÂ to buy, but couldnâ€™t for a number of reasons including mortgage denials; or, insurmountable home inspections issues; or, homes appraising for less than the contract price.
As contract failures subside, Existing Home Sales are expected to rise even faster.
And, lastly, first-time buyers continue to power the home resale market. In January, 33% of all sales were made to first-time buyers, up four points from last year. This statistic suggests that renters are moving into homeownership, an important component in a sustained housing market recovery. Â
Given high demand and shrinking supply, we should expect for Lincoln Park home prices to rise in the coming months, if they havenâ€™t already.Â Thankfully, mortgage rates remain near all-time lows.
Low mortgage rates make homes more affordable.