The national inventory of existing homes is larger now than it has been since the run-up of sales since thousands of first-time buyers rushed to the closing table last fall to qualify for the $8,000 tax credit, according to the January existing homes sales report released today by the National Association of Realtors.
Some 3,265.000 existing homes are now on the market, a 7.8 months supply. The national inventory increased 8.3 percent in January. The months supply has not been as high since September.
Existing-home sales dropped 7.2 percent to a seasonally adjusted annual rate of 5.05 million units in January from a revised 5.44 million sales in December.
For single family homes, the boost in inventory is more pronounced. Two point eight million single family homes are listed for sale, a 10.1 percent increase over December. Single family home inventories are also higher than they have been since September.
The increase in inventory is a concern because the holidays are traditionally a slow time for home sales and many owners wait until January or February before listing their homes. They are hoping for strong demand early this year in light of the April 30 deadline for the tax credit, which was extended by Congress in November. Sellers are hoping the credit will give demand a boost and kick off the spring home buying season as buyers rush to get a contract on a home by the deadline.
A surge of December foreclosures also contributed to the rise in inventory. January REO activity nationwide was down 5 percent from the previous month; and scheduled foreclosure auctions were down 11 percent from the previous month, according to RealtyTrac, but December saw a huge jump in foreclosures coming on market.
“January foreclosure numbers are exhibiting a pattern very similar to a year ago: a double-digit percentage jump in December foreclosure activity followed by a 10 percent drop in January,” said James J. Saccacio, chief executive officer of RealtyTrac. “If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works.”