Sales of previously occupied homes rose in January to the second-highest level in three years, offering further evidence of recovery in the beleaguered housing sector.
The National Association of Realtors reported this week that existing home sales rose 0.4 percent in January to a seasonally adjusted annual rate of 4.92 million.
The median price for a home sold in January was nearly $175,000 up more than 12 percent from a year ago. Analysts say there would have been even more purchases if more properties were available. The 1.74 million previously owned homes on the market at the end of January approached an 8-year low and based on January’s sales pace, it represents just over 4 month supply. That's the tightest number since April of 2008.
And minutes from the Federal Reserve’s latest meeting revealed this week America’s Central Bank may allow interest rates to rise sooner than expected. That’s a bullish development for the economy. And in its quarterly Ag Letter, two member banks of the Federal Reserve expressed a similar outlook for rural land values.
According to the Federal Reserve Bank of Chicago, farmland values shot up last year by a staggering 16 percent in a 5-state region in heart of the Corn Belt.
Appreciation in 2012 rivaled that of 2007 and 2011 and is the third-largest increase in ‘good’ farmland since the late 1970s. States enjoying the largest gains were in Illinois, Michigan and Iowa.
The biggest growth came in the fourth quarter of the year. Economists with the Federal Reserve Bank in Chicago credit uncertain tax policies known as the fiscal cliff, for much of the gains.
2012 marked the third consecutive year of significant jumps in agricultural land values in this region. Beginning 2010, farmland has experienced a cumulative rise of 52 percent. That rivals the fastest gains realized from 1974-1976.
Economists add the drought did not hamper land values in the area, despite impacting yields.
The region and many other parts of the country are still locked in drought as indicated in this week’s Drought Monitor, produced by the University of Nebraska.
Many analysts believe the drought will be the top rural story of 2013 and will be a key factor in crop prices affecting both farmers and livestock producers.
The story is similar in the Federal Reserve District based in Kansas City. Irrigated farmland values jumped 30 percent, led by gains in Kansas and Nebraska.
Land prices helped push up farm incomes as well. According to Kansas City’s analysis, high pre-harvest crop prices lifted incomes, especially for farmers on irrigated land, while crop insurance payments compensated for yield losses for their non-irrigated counterparts. And in the wake of a post-harvest decline in crop prices, losses narrowed for livestock producers.
Despite the bullish outlook, bankers expressed concern that drought conditions could spread to other areas like pasture land exacerbating already deteriorating conditions in Kansas and Oklahoma.
Bankers also expressed general concern over the areas still in drought would make fewer capital improvements in early 2013.