This winter has been a particularly tough one. And these brutal wintry conditions have likely caused the housing market to slow down.
According to the National Association of Realtors, pending home sales were unchanged from their slow pace in January, as homebuyers likely put off a purchase until the weather warms up. The pending home sales index reached 95 in January, up 0.1 percent from the month before and down from 104.4 a year ago. NAR noted that the gains made in the South were essentially offset by declines in the West and Midwest.
Lawrence Yun, NAR chief economist, said a number of things likely contributed to the low activity in January, including the persistent cold weather.
"Ongoing disruptive weather patterns in much of the U.S. inhibited home shopping," he said. "Limited inventory also is playing a role, especially in the West, while credit remains tight and affordability isn't as favorable as it was a year ago."
And while pending home sales slightly increased from December, it isn't saying much considering they were at their lowest point since December 2011.
"Pending home sales are existing home sales that have gone to contract (similar to the new home sales data reported) but have not yet closed, thus they tend to lead the existing home sales report by a month or two," said Lindsey Piegza, chief economist with Sterne Agee. "Weather was blamed for much of the recent weakness in home sales activity but this morning's report suggests that there may still be months of light activity to come even as weather (hopefully) improves."
Prices increased in January
While pending home sales were slow to start 2014, home prices continued to increase at a strong pace.
The latest RE/MAX National Housing Report showed that home prices increased in January. The median price for a home during the month was $173,475, up 11.6 percent on a year-over-year comparison. The report also showed that home sales dropped 7.1 percent during that same period of time. Again, experts attributed the reduced sales activity to the poor winter weather.
"We usually expect to see fewer home sales in the winter months, but January experienced particularly severe storms in a large part of the country, which disrupted appraisals, inspections and closings," said Margaret Kelly, RE/MAX CEO. "However, the real story for home sales in 2014 will begin to unfold in the coming spring and summer months."
The data also showed that homes sold in January were on the market for an average of 75 days, an increase of two days when compared to December 2013 and 12 days fewer than a year before.
Market well-positioned for buying season
Home sales typically slow down during the colder months of the year, and considering this winter was especially rough, sales were particularly slow. However, the upcoming spring and summer homebuying seasons should see a lot of activity. The days of low inventory levels and strong price appreciation are likely numbered, according to NAR.
Yun said that as builders are likely to increase activity in the coming months, two of the major problems facing the industry - price appreciation and low inventory levels - will continue to be corrected by construction.
As homebuyers are likely to come out in droves in 2014, especially once the weather warms up, they will want to be thorough in every step of the process. A home is likely the largest purchase someone will make in his or her lifetime, therefore it's critical to have it inspected.
An experienced home inspection company will clue a buyer in on every aspect of the property, from the roof to the electrical system. Buyers are given peace of mind knowing a reputable home inspector has gone through and assessed the property.