Sales of existing homes fell 7.4% in January, the biggest decline in two years, as activity returned to more normal levels after a December sales spurt, a real estate trade group reported Tuesday.
The National Assn. of Realtors said existing single-family homes were sold at a seasonally adjusted annual rate of 3.63 million units in January after a 5.7% rise in December to a rate of 3.92 million.
It was the biggest one-month drop since a 13.3% plunge in January, 1987, and left the pace of sales at its slowest point since July.
Analysts, however, said they were not overly concerned, noting that the December sales pace had been the fastest in two years. Even with the January setback, sales were still 13.4% above where they were in January, 1988.
“Overall, January’s activity shows signs of another strong year for home sales,” said Ira Gribin, president of the realtors’ group. “The market is now dominated by the volume of buyers, many of whom are repeat purchasers in their peak income years.”
Homes prices continued to rise in January. The median price of a home rose 3.2% to $91,500.
John Tuccillo, chief economist for the group, said the price increase would have been even larger if it had not been for an increase in sales volume at the low end of the price range as buyers altered their choices because of rising mortgage rates.
Mortgage rates, as tracked in a national survey by the Federal Home Loan Mortgage Corp., hit 10.78% last week, with many economists expecting them to soon pass 11%.
The group also said sales of condominiums and cooperative apartments fell in the fourth quarter, citing a weak market caused by a glut of available units. It said apartment resales fell 6.6% to 327,000 units on a seasonally adjusted basis in the fourth quarter, from 350,000 units in the third quarter.
The month-to-month sales decline was led by a sharp 12.6% drop in the South, where sales fell to an annual rate of 1.31 million units.
Sales in the West declined by 8.6% to an annual rate of 640,000 units, and sales in the Midwest fell 5.9% to an annual rate of 950,000 units.
The Northeast was the only region of the country posting a sales increase from December to January, a 1.4% rise to an annual rate of 710,000 units.
Separately, the National Assn. of Home Builders said the percentage of U.S. households owning a home continued to slip in 1988 in all groups except households headed by people 65 and older.