22 February 2012 15:52 [Source: ICIS news]
In its monthly report, the National Association of Realtors (NAR) said that sales of existing homes in January were at a seasonally adjusted annual pace of 4.57m units compared with a downwardly revised 4.38m rate in December.
December’s sales of existing homes had originally been estimated at 4.61m for a 5% gain over November’s pace.
But with December’s sales revised downward to 4.38m, the 5% advance over November evaporates, and December’s sales pace actually marked a slight decline from November’s 4.39m rate.
The NAR noted, however, that January’s pace of existing home sales was 0.7% higher than the activity level seen in January 2011.
The housing market is a key downstream consuming sector for a wide variety of chemicals, resins and derivative products.
While new home construction is the principal consuming engine for chemicals in the housing sector, sales of existing homes is important because they take older residences off the market and help generate demand for new construction.
NAR chief economist Lawrence Yun said that strong gains in recent existing home sales “shows that buyers are responding to very favourable market conditions”.
“The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formations, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” he said.
Yun also pointed out that the inventory of existing homes for sale edged down by 0.4% in January to 2.31m units on the market, representing a 6.1-month supply at the current sales pace.
Total unsold housing inventory has been trending down since the record high of slightly more than 4m units in July 2007 and is now nearly 21% below the January 2011 level.
The national average interest rate for a 30-year fixed-rate home loan was at an all-time low of 3.92% last month, NAR noted. Tracking of average mortgage loan rates began in 1971
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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