Existing home sales fell for the third-consecutive month in January, according to new data from the National Association of Realtors (NAR). Home sales were down 1.2 percent over last month and 8.5 percent from January 2018.
The 4.94 million homes sold in January 2019 is the lowest home sales have been since November 2014. The Northeast was the only region that saw an increase in sales activity.
“Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low,” NAR Chief Economist Lawrence Yun said. “Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.”
Even with home sales declining, prices continued to rise year-over-year for the 83rd consecutive month, albeit at a slower pace than last year. The median existing-home price for all housing types was $247,500, up 2.8 percent from January 2018.
The 2.8 percent increase is the slowest year-over-year growth has been since February 2012, according to Yun.
Lower mortgage rates should lead to an increase in sales activity, but prices are still rising so affordability will be at the forefront of buyer’s minds, according to Danielle Hale, the chief economist at realtor.com
“Lower mortgage rates should eventually spur additional home sales activity, and mortgage application data has more recently shown a pickup,” Hale said. “Prices continue to rise, but at slower pace than 2018, up just 2.8 percent above last January. Even with mortgage rates roughly in line with 2018, higher home prices mean would-be buyers are likely to have affordability top of mind while navigating this year’s spring housing market.”
Aaron Terrazas, the senior economist at Zillow, said it’s risky to read too much into the down numbers as a larger trend.
“The partial federal government shutdown and the polar vortex that hit much of the country mid-month weighed on economic activity in January,” Terrazas said.
“However, 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 jumped in come the New Year as the market stabilized and their expectations shifted,” Terrazas added. “But these sales likely won’t be visible in the closing data until February or March.”