Rate Rise Cuts Home Sales in January

Higher mortgage rates dragged sales of existing homes sharply lower in January as the rampant pace of sales in recent months cut the inventory of homes available for sale to an all-time low.

The National Assn. of Realtors said Friday that existing homes were sold at an annualized pace of 4.59 million units in January, 10.7% below December’s rate of 5.14 million units.

January’s sales pace was the lowest since a 4.39-million pace in November 1997 and marked the largest percentage decline since a 12.5% drop in April of 1995.

January’s sales pace was 10% below the year-earlier pace of 5.1 million units and well below the 5.04-million pace predicted by economists. Harsh weather in some parts of the country also helped slow sales, analysts said.

Meantime, the inventory of homes on the market in January dropped to 1.15 million units, down a sharp 23% from December. At the current sales pace, there was a mere three-month supply of homes available for sale, a record low.

Despite the skimpy inventory levels, the nationwide median home price fell in January to $132,200 from December’s $133,700. The mean home sales price remained steady at $168,800.