In what appears to be, at least partly, a weather-related effect on the economy, existing housing sales fell to their lowest point in more than 18 months, as a bitter winter throughout much of the U.S. dragged down on sales in January. Other factors influencing the drop were higher prices, insufficient inventory and limited credit.
The fall in home sales was reflected in all for regions of the country, and one economist who forecast the decline noted while the weather had some impact, equally important was “role was played by lower inventories, higher mortgage rates, slightly higher prices and tighter credit,” but he remained optimistic that once spring arrives, home sales should improve.
The drop was calculated at 5.1 percent from January of last year, and the month also showed a 10.7 percent increase in the median sale price of home from 2013. Regionally, the west, including California, had the largest drop in existing residential real estate market, at 7.3 percent.
This demonstrates that low inventories and other issues are a significant part of the drop, as California and much of the west has been spared the incessant cold and storms that have plagued the Midwest, South and East Coast.
Other detrimental factors continue to be the uptick in interest rates, which has apparently worried some builders, and further restrained new home starts, as they fell by 16 percent in January.
Hope spring eternal, and we hope that when spring finally arrives, an increase in traffic with trigger builders to resume an increase in building that will increase inventory and attract more buyers to the real estate market.
Source: Bloomberg.com, “Sales of U.S. Existing Homes Slump to Lowest Since July 2012,” Victoria Stilwell, February 21, 2014