Bloomberg News/Landov
A for-sale sign stands in front of a home in Durham, North Carolina.
The numbers: Existing-home sales ran at a 4.94 million seasonally-adjusted annual rate in January, the National Association of Realtors said Thursday.
What happened: Sales of previously-owned homes were even lower - by 1.2% - than the 3-year low they hit in December. They were 8.5% lower than a year ago.
That missed the MarketWatch consensus of an unchanged pace.
The median price of a home sold in February was $247,500, up 2.8% compared to a year ago. That was the slowest annual price growth since 2012, and homes were on the market for an average of 49 days, up from 46 days in December and 42 days a year ago, all signs of shifting market supply-demand forces. Still, there isn’t much more inventory than before: at the current pace of sales, it would take 3.9 months to exhaust available supply.
First-time buyers haven’t made any progress, and even took a step back in January, making up 29% of all transactions during the month, well below their long-term average 40% share.
Big picture: The housing market may have navigated a soft landing in 2018 only to discover the same constraints that have held back growth ever since the recovery began: supply, affordability, and the specter – if not the reality – of rising rates. That’s bad for the economy, worsens inequality, and is ultimately self-defeating for the housing market.
Regionally, the picture was mixed, as always. Sales increased by 2.9% in the Northeast, the only region to see a gain during the month. They were down 2.5% in the Midwest, 1.0% in the South, and 2.9% in the West.
Read: It’s not getting any easier to buy a house, and more Americans may just give up
What they’re saying: “The change in the tax law reduced the tax-advantage of mortgages, especially in high-tax states, and this has had its negative effect. The latest survey data covering new-home builders has improved some, in line with lower mortgage rates, but the turn in sentiment did nothing to alter the downtrend in builder sentiment that began last March,” noted Steve Blitz, chief U.S. economist for TS Lombard.
“Builders have a good record of forecasting the unemployment rate 18 months out,” Blitz added. “Not wanting to dismiss the prescience of builders now, the relationship implies a 5% or so unemployment rate by the middle of next year.”
Market reaction: Mortgage rates have moved lower in line with the 10-year U.S. Treasury TMUBMUSD10Y, +1.76% since the start of the year. Some market analysts believe lower bond yields are sending a worrying signal about the health of the economy, as Blitz and others have foreshadowed, but housing-watchers are glad for the reprieve for borrowers.
See also: The average adjustable-rate mortgage is nearly $700,000. Here’s what that tells us.
