The National Association of Realtors reported today that existing-home sales declined in January with some buyers waiting to see how details of the economic stimulus package would affect them. The report also indicated that inventories fell to a two-year low.

Existing-home sales - including single-family, townhomes, condominiums and co-ops - fell 5.3 percent to a seasonally adjusted annual rate of 4.49 million units in January from a level of 4.74 million units in December, and are 8.6 percent lower than the 4.91 million-unit pace in January 2008, the study maintained.

Lawrence Yun, NAR chief economist, said there was understandable hesitation by some home buyers: "Given so much stimulus package discussion in January, some would-be buyers simply sat out for clarity and certainty on the nature of housing stimulus," he said. "The housing market," he added, "will soon get a lift from very favorable buying conditions - not only from improved affordability, but also from the stimulus of an $8,000 first-time home buyer tax credit, and higher conforming loan limits that will allow more people to tap into 50-year low mortgage rates."

The association estimated that the impact of the stimulus package and lower interest rates on the housing market to be about 900,000 additional home sales in 2009 compared to conditions before the stimulus package and that inventory is expected to fall below an 8-month supply by the year end, which would be consistent with home price stabilization.

Total housing inventory at the end of January fell 2.7 percent to 3.60 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace. In January 2007 there were 3.54 million homes for sale.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low at 5.05 percent in January from 5.29 percent in December; the rate was 5.76 percent in January 2008.

Mr. Yun observed that "distressed sales activity appears to be leveling off, although there are wide differences locally; for example, close to 80 percent of all sales are either foreclosed properties or short sales in Santa Ana, Calif., but less than 20 percent in the Chicago region." About a quarter of all inventory is listed as being distressed, but the association estimates that distressed sales - foreclosed, or those requiring a lender-mediated short sale - comprised about 45 percent of all sales in January.

The report said that single-family home sales fell 4.7 percent to a seasonally adjusted annual rate of 4.05 million in January from a pace of 4.25 million in December, and are 7.1 percent less than a 4.36 million-unit level in January 2008. The median existing single-family home price was $169,900 in January, which is 13.8 percent below a year ago.

Existing condominium and co-op sales, it continued, dropped 10.2 percent to a seasonally adjusted annual rate of 440,000 units in January from 490,000 units in December, and are 20.3 percent lower than the 552,000-unit level a year ago. The median existing condo price4 was $174,400 in January, down 20.6 percent from January 2008.