Sales of previously owned homes edged up in January, held back by a shortage of homes for sale, according to the National Association of Realtors.
Single-family home sales increased 0.2% to a seasonally adjusted annual rate of 4.34 million in January vs. 4.33 million in December, and 8.5% above the 4 million-unit level in January 2012.
The median single-family home price was $174,100 in January, up 12.6% from a year ago.
Lawrence Yun , NAR chief economist, said tight inventory is a problem and, as a result, "We've transitioned into a seller's market in much of the country."
"Buyer traffic is continuing to pick up, while seller traffic is holding steady," he said. "In fact, buyer traffic is 40% above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly."
During the boom years, existing homes were selling for more than new construction. As the housing market collapsed, existing home prices fell below new home prices. Realtors then started to tell their listing clients that they needed to update their homes to sell for a price closer to new homes. Home owners jumped on the update wagon and then found out they were not close to recouping their updating expenses. So now these sellers have pulled their houses off the market or simply not listed their houses.
But the buyers are out there and want the new home features but not willing to pay the price for an updated used house. These buyers are heading to the new home market. This is why you are seeing good activity in new home subdivisions and this is why the active homebuilders are doing so well.