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Housing’s big chill

By Judy Martel · Bankrate.com
Tuesday, February 25, 2014
Posted: 3 pm ET

Sales of existing homes fell in January to the lowest level since July 2012 and are 5 percent below the pace of January a year ago. Meanwhile, median prices for existing homes nationally rose by 10.7 percent from a year ago, to $188,900.

surprising-things-home-insurance-covers-5-expensesOnce again, an unusually cold winter is hampering housing activity, according to the National Association of Realtors.

"Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception," Lawrence Yun, chief economist for the National Association of Realtors, said in a release. "At the same time, we can't ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates."

Don Frommeyer, president of National Association of Mortgage Professionals and a broker in Carmel, Ind., says severe weather is playing a part in delaying appraisals as well as buying and selling activity. "My house in Indianapolis still has three feet of snow all around it."

Frommeyer adds that while the prolonged winter weather is playing a part in slower activity, it's not the entire story. Potential buyers have a lot on their minds other than housing, including how the new health care legislation and the sluggish job market will affect their wallets.

"It's probably 75 percent weather-related," Frommeyer says. He believes the market will thaw as the months grow warmer. For the near future, he expects mortgage rates to remain pretty stable, which will help drive both home buying and refinancing.

Midwest and West see biggest declines

Existing home sales in the Midwest declined in January by 7.1 percent, while the West dropped by 7.3 percent. The National Association of Realtors reports that tight inventory in the West is hampering sales activity and also driving up prices. The median home price of $273,500 is 14.6 percent higher than it was in January a year ago.

Sales in the Northeast fell by 3.1 percent in January and prices rose by 6.6 percent from a year ago, to $241,100. In the South, sales declined by 3.5 percent last month. The median price of $161,500 is 9.4 percent higher than a year ago.

Keep up with your wealth and mortgages and follow me on Twitter: @JudyMartel.

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