January results for the housing market

Various reports issued this week show contradicting and in some cases unexpected trends in the housing market in January. First, sales of existing homes rose 3%, the largest month-over-month gain in 2 years, according to the National Association of Realtors (NAR). At the same time, the inventory of unsold homes rose 2.3%, in spite of a drop in new construction reported earlier this month. At the current sales pace, the unsold inventory equals a 6.6 month supply. Existing home sales in January were still 4.3% below the January 2006 levels. On the other hand, sales of new homes dipped 16.6% below December 2006 sales, according to the Department of Housing and Urban Development (HUD). The median sales price dropped 3.1% on year-over-year basis, to $210, 600.

NAR officials said it’s hard to tell whether the real estate market has bottomed out, as large-scale weather events may have affected the January sales numbers. Are they saying anything new? Yes, NAR president Pat Combs said the market “is trending up”, but what is the evidence behind such statements? This could be the bottom, with its mixed trends and contradicting results, but it might as well be an extension of the downward curve. I don’t think anyone knows for sure. We’ll wait until the February results come out.