The number of closed home sales in January continued the relative improvement we saw last month. Single family home sales were down only 7.8 percent from January 2005, which doesn’t sound that great, but actually represents a huge improvement over the 25 percent year-over-year declines we saw through much of 2006. And get ready for this: condo sales actually increased by 6.7 percent from a year ago.

Meanwhile, inventory dropped to the point where it was only up 9.2 percent from January 2006 levels. This is also a relative improvement, comparable to year-over-year increases of 80 percent or more during 2006. It looks like a lot of people who took their homes off the market late last year have given up on selling for the time being.

The months-of-inventory figure held steady at about 6.6 months.

I mentioned last month that December and January are buffetted by seasonal factors and thus not terribly informative. However, much of the seasonal weirdness can be accounted for by focusing on year-over-year comparisons as I have above. Viewed in this light, January supply and demand looked more promsing than they have in a while.

A couple months of relative strength, however, do not mean that the downturn is over. See my prior entry for more details on the continued challenges to the real estate market.

— RICH TOSCANO

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