Instant view: Existing home sales rise 2.7 percent in January

NEW YORK (Reuters) - Sales of previously owned U.S. homes rose unexpectedly in January, but prices fell to their lowest level in nearly nine years, an industry group said on Wednesday.

KEY POINTS: * The National Association of Realtors said sales climbed 2.7 percent month over month to an annual rate of 5.36 million units from a downwardly revised 5.22 million pace. * Economists polled by Reuters had expected January sales to fall 2.1 percent to a 5.24 million-unit pace from the previously reported 5.28 million units in December.

COMMENTS:

JEFFREY SICA, PRESIDENT AND CHIEF INVESTMENT OFFICER, SICA WEALTH MANAGEMENT, MORRISTOWN, NEW JERSEY:

"The one thing this shows is that inventories are beginning to clear up. With interest rates still low, the fact that we're starting to see improvement there is very positive. Unfortunately, I think this month will be the exception. As interest rates start to climb I think we'll see home sales decline. Prices have room to fall further. They haven't improved as much as I have anticipated."

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON:

"The data is quite mixed here. It's very encouraging to see that sales are rising, and importantly, inventories are dropping. Over the medium to long term, that should boost prices, although in this data we're seeing that home prices actually fell again in January to their lowest levels since 2002."

JIM AWAD, MANAGING DIRECTOR, ZEPHYR MANAGEMENT, NEW YORK:

"Better than expected, but I don't think it will have a tremendous impact (on the markets) because prices went down. On balance, it's a piece of good news but it's not statistically significant."

RUDY NARVAS, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK:

"There is not doubt that it came out better than expected -- it looks like some of the volatility because of the tax breaks has calmed down a bit. You see some promising signs in months supply declining, suggesting some of that inventory overhang is dissipating. You also saw distressed sales climb to a 12-month high suggesting that maybe that shadow inventory is clearing as well. With the distressed sales clearing you know the market should continue to stay alive, but whether it adds to GDP, we'll have to see how the new homes sales turn out."

TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:

"For me, it's sort of -- have you heard the news that they may be overstating sales dramatically? After that news, what do you do with this number? It could be wrong by like two million units. Between now and the middle of the year I think you're always going to have that in the back of your mind. From that perspective I think you have to take this number in stride. You're sort of left wondering what does it really mean?

"Just a couple of interesting things here: One, they said that 37 percent of sales were distressed. I think that's a 12-month high, just sort of driving home the point that there's still a significant amount of disrepair in this market.

"They said 32 percent of all sales were cash -- that's three times the average.

The market is squarely focused on events in the Middle East."

DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES, NEW YORK:

"I was a little surprised that we saw the gain in January, I would have thought that the winter weather would have kept some buyers away from the market, it doesn't appear to have happened though and we're a little bit encouraged by it. The sharp drop in the home sales price data may be the result of revisions that don't affect past median prices but can affect the sample of the current price, so we're looking into that, not certain that's the case."

"The sales increase was pretty surprising to me, I thought that the weather would really take a toll, which I would guess is probably an indication that the weather wasn't as much away from normal as we perceived it to be at the time."

DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:

"January existing home sales surprised on the upside with a 2.7 percent increase to 5.36m (consensus was 5.24m) backing the signal from continued gains in December pending home sales but outperforming much recent housing survey evidence. This was the 5th rise in 6 months and the data is up 5.3 percent yr/yr despite a tax credit to encourage buyers having been in place a year ago. While sales trend now looks positive, price data was weak, with the median price hitting its lowest since April 2002."