First-time buyers accounted for 26% of purchases last month, down from 27% from the month before and 30% from January 2013. This is the lowest market share for first-time buyers since monthly tracking began in October 2008; normally, they should be closer to 40%.

First Time Home Buyer Market Share Drops

All-cash sales comprised 33% of transactions, up from 32% from the previous month and 28% in January 2013. Individual investors, who account for many cash sales, purchased 20% of homes in January, compared with 21% the month before and 19% in January 2013. Seven out of 10 investors paid cash in January.

Distressed homes – foreclosures and short sales – accounted for 15% of sales, compared with 14% the month before and 24% in January 2013. Eleven percent of January sales were foreclosures, and 4% were short sales. Foreclosures sold for an average discount of 16% below market value while short sales were discounted 13%.

Total housing inventory at the end of the month rose 2.2% to 1.90 million existing homes available for sale, which represents a 4.9-month supply at the current sales pace, up from 4.6 months. Unsold inventory is 7.3% above a year ago, when there was a 4.4-month supply. A supply of 6.0 to 6.5 months represents a rough balance between buyers and sellers.

The median time on market for all homes was 67-days down from 72-days during the previous month and 71-days on market in December 2013. Short sales were on the market for a median of 150-days while foreclosures typically sold in 58-days and non-distressed homes took 66-days. Thirty-one percent of homes sold in January were on the market for less than a month.