Up or down

Depending on how you read this past week's news, home sales are both up and down. A headline on Thursday from the Associated Press reads; "Sales of new homes rebound in January." A press release from the National Association of Realtors on Friday reads; "Existing-home sales drop in January while prices continue to grow." If you are confused re-read each headline and you will notice the difference. "New" homes sales are up, "Existing" home sales are down.

Other than this year's obvious scapegoat; the weather in the Midwest and East, many agree there is another likely reason for the decline. After a surge in the buying of existing homes last year, inventories shrank. Investors and first-time buyers snatched up bargain priced foreclosures and suitable starter homes before builders gained the confidence to begin speculation that the homes they built would be bought. Only after orders for homes to be built increased was their confidence elevated to, once again, enter the riskier "spec home" market. Many, whose market is above the $300,000 range are still extremely cautious as they should be.

In the Coeur d'Alene Multiple Listing Service more than 83 percent of our sales are below that range. Homes are more expensive to build today than several years ago before building slowed to a near standstill. According to the AP story, the average price of a new home is up 3.4 percent from a year ago at $260,100. Existing homes on the other hand, if you can find one suitable, are averaging $188,900 nationally, up 10.3 percent from January 2013.

Interest rates too, are rising, causing some to intensify their search as economists predict that 30-year mortgage rates will soon be at 5 percent.

We find it interesting to note that, while the lag in existing home sales is attributed in part to the inclement weather, the AP story tells us that the Northeast saw a surge in new home sales by nearly 74 percent. The Midwest however, hit hardest by weather, in fact did see a decline of more than 17 percent according to the report.

As for existing home sales, the National Association of Realtors Lawrence Yun, NAR chief economist, said unusual weather is playing a role. "Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception," he said. "Some housing activity will be delayed until spring. At the same time, we can't ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates. These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impact."

So there you have it. The declining availability of existing homes including bargain priced, distressed properties has caused prices to rise, making it more difficult to find suitable existing properties under $300,000 thereby spurning new home construction and sales. When you look at it that way, it all makes perfect sense.

We still think 2014 will be a good year for the housing market. In spite of the national market, our builders are building affordable homes and although foreclosures and short sales are fewer, owners of existing homes are introducing properties to the market, a practice that is sure to escalate as we reach spring.

Trust an expert...call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.

Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.