Sales of previously-owned homes rose in nearly every region of the country in January according to an industry report released Thursday. Meanwhile, the supply of homes for sale continued to drop, pushing up property values for the 11th consecutive month of year-over-year gains.
Total existing-home sales—completed purchases that include single-family homes, condos, townhomes, and co-ops—increased 0.4 percent in January to an annualized rate of 4.92 million according to the National Association of Realtors. That's more than 9 percent ahead of the sales pace recorded in January 2012, and the second highest rate of sales since November 2009, when a federal homebuyer tax credit was set to expire.
Experts credit heightened buyer interest and a tightening supply of homes for sale for the burgeoning seller's market materializing across the country, with the most acute conditions happening the West.
Total housing inventory at the end of January 2013 fell almost 5 percent to 1.74 million—a 4.2-month supply at the current sales pace—the lowest supply of homes since December 1999 when there were 1.71 million homes on the market.
Many would-be sellers continue to hold off from putting their homes on the market because they have underwater mortgages, experts say. While almost 2 million Americans were freed from negative equity in 2012 according to a recent report from real estate website Zillow, nearly 14 million still remain in trouble on their mortgages.
"Negative equity is still very high, and millions of homeowners have a very long way to go to get back above water, even with current robust levels of home value appreciation in most areas," Zillow Chief Economist Stan Humphries said in a release. "As a result, negative equity will remain a major factor in the market for the foreseeable future."
Foreclosures, the glut of which was once a source of great anxiety in the housing market, have consistently made up a smaller portion of sales in recent months, further constraining a once-plentiful source of home supply for the crucial first-time homebuyer set.
But even with inventory the tightest it's been in years, experts aren't expecting any relief anytime soon."We expect a seasonal rise of inventory this spring, but it may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth," NAR Chief Economist Lawrence Yun said in a statement, adding that increased buyer traffic has effectively transformed much of the country into a seller's market.
"Buyer traffic is continuing to pick up, while seller traffic is holding steady," he said. "Buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly."
Meg Handley is a reporter for U.S. News & World Report. You can follow her on Twitter or reach her at firstname.lastname@example.org.