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Existing-home sales plunge

| Saturday, Feb. 22, 2014, 12:01 a.m.

WASHINGTON — Sales of existing homes plummeted in January to the worst pace in 18 months. Cold weather, limited supplies of homes on the market and higher buying costs held back purchases.

The National Association of Realtors said Friday that sales fell to a seasonally adjusted annual rate of 4.62 million units last month. That was down 5.1 percent from the December pace. The sales rate declined 5.1 percent over the previous 12 months.

Higher mortgage rates and higher prices have contributed to a slowdown in home buying in five of the past six months. Freezing temperatures and snowstorms have also caused most housing activity to slip this winter. The flagging sales suggest a deceleration from the momentum for much of 2013, when 5.09 million homes were sold, the most in seven years.

“Such a picture confirms that the U.S. housing market reached its peak at the end of 2013 and further reacceleration is unlikely near term,” Annalisa Piazza of Newedge Strategy said in a research note.

Home building dipped 16 percent in January from December, the Commerce Department said this week. Signed contracts to buy homes plunged in December, foreshadowing the January drop-off, the Realtors said in a separate report.

The weather has kept would-be buyers from venturing to open houses, while construction crews have endured work stoppages.

But sales also declined in parts of the country where weather was less of a factor. This suggested that price pressures and tight inventories are also weighing on the real estate market.

Buying fell 7.3 percent in Western states, the region less affected by winter storms and where average prices are the highest. That decline was significantly larger than in the Northeast, South and Midwest. The median price of homes in the West is $273,500, almost double the median price in the Midwest.

The median price nationwide has risen 10.7 percent to $188,900 since January 2013. There are just 4.9 months of available inventory on the market, a sign that would-be buyers have relatively few homes to pick from and may choose to delay purchases.

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