Home sales in the U.S. accelerated in the first month of the year driven by falling home prices and expectations for increasing mortgage rates, according to Bloomberg. On Tuesday, the National Association of Realtors reported that sales added 22% during the three months ending January, which is the largest such gain since the expiration of a homebuyer tax credit last year. The strong showing came as the median price for a home in the U.S. dropped to $158,000, marking the lowest level in nearly a decade.
The trend seen in the quarter to January is expected to continue in 2011, with Fannie Mae forecasting for further increases in sales as prices continue to slip. However, the market still remains fragile, as the NAR recorded a 2.8% drop in pending home sales during January, which are now 17% above the record low recorded in June 2010. Fannie Mae expects to see home prices decline 2.2% this year, while home resales will jump 6% to reach a four-year high. New-home transactions are projected to reach a three-year high after adding 18% from the record low posted last year.