January Existing Home Sales: Another Disappointment, But Spring is Coming

• Existing home sales fell 1.2 percent in January from December, and were down 8.5 percent from a year ago to 4.94 million sales (SAAR), according to the National Association of Realtors.
• Inventory of existing homes for sale rose 3.9 percent from January and 4.6 percent from a year ago.
• The median (non-seasonally adjusted) price of existing homes sold in January was $247,500, up 2.8 percent from a year ago.

Another monthly decline to begin 2019 might be tough for some to swallow after a disappointing end to 2018 and months of generally soft sales numbers. But it's risky to read too much into the January existing home sales data. The partial federal government shutdown and the polar vortex that hit much of the country mid-month weighed on economic activity in January. But interest rates fell to 10-month lows, and with for-sale inventory creeping higher late in the fall, potential home buyers who had been sitting on the sidelines in fear of a broader housing market slowdown likely shifted their expectations as the market stabilized and jumped in come the New Year. But these sales likely won’t be visible in the closing data until February or March. The outlook for mortgage rates has shifted decisively lower over the past two months. Together, lower rates combined with stronger inventory and more temperate weather bode well for home sales in February and March.

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