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Originally published Friday, February 24, 2012 at 8:02 PM

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Sales of existing homes up 4.3 percent in January

Sales rose in all four major regions, including an 8.8 percent pop in the West.


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WASHINGTON — Sales of existing homes rose 4.3 percent in January and inventories fell to nearly seven-year lows, as lower prices, unusually warm weather and an improving economy all lifted demand.

The National Association of Realtors said Wednesday that January sales were at a seasonally adjusted annual rate of 4.57 million.

Sales rose in all four major regions, including an 8.8 percent pop in the West.

Job creation, mild weather, rising rents, and what is referred to as increased household formation contributed to the sales gains, according to Lawrence Yun, chief economist of the Realtors' group.

"Things are genuinely improving," Yun said. "Maybe we are seeing household formation popping out," he added.

That could mean children moving out of their parents' homes as they got a job, he said.

December's sales were downwardly revised to a 4.38 million rate from a previously reported 4.61 million, making the final month of 2011 a 0.5 percent decline instead of a 5 percent gain.

December sales were downwardly revised as part of a seasonal adjustment that affected monthly, but not annual, sales.

That's not to be confused with the 14 percent downward revision the trade group recently conducted on all sales data from 2007 onward.

The National Association of Realtors called the latest revisions "minor" and said the figures didn't affect total 2011 sales of 4.26 million.

"It's still the case that existing home sales are recovering, albeit only gradually," said Paul Diggle, property economist at Capital Economics.

He noted that sales are up 13 percent over the past six months and up 38 percent from their mid-2010 low, "so there's clearly an underlying recovery in place."

Median sales prices in January fell 2 percent from the year before to $154,700. Home prices are usually weaker in the winter because there are fewer transactions, and the National Association of Realtors doesn't seasonally adjust the price data.

Inventories fell 0.4 percent to 2.31 million, which represents the lowest inventories since 2005. That represents 6.1 months of supply, the lowest since April 2006 and down from 6.4 months of supply in December.

"The supply-and-demand situation may be coming into balance," Yun said.

Inventories were as high as 4.04 million in July 2007.

Not everyone is convinced.

"We are skeptical that this trend will continue in the months ahead due to the wave of foreclosure activity that will likely begin following the end to the moratorium on foreclosure activity around the country," said economists from Wells Fargo in a note to clients.

Distressed sales, which include foreclosures and short sales, accounted for 35 percent of all transactions, up from 32 percent in December.

Investors accounted for 23 percent of homes purchased.

Yun said there's a competition between investors and first-time buyers for these distressed sales.

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