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BCN-17
US-HOUSING-SALES-INDICATOR
US existing home sales hit three-year low in December
WASHINGTON, Jan 23, 2019 (BSS/AFP) – Sales of existing US homes
unexpectedly plunged to a three-year low in December, partly reflecting a
bump in mortgage rates, according to an industry survey.
Amid rising prices and tight supply in addition to cold weather and
California wildfires, analysts had been expecting slower sales in the final
month of 2018.
But December’s sudden drop could exacerbate fears of a weakening housing
market, which economists say is often the first sector to head south in an
economic downturn.
With mortgage rates cooling in recent weeks, sales could recover in early
2019, according to the National Association of Realtors, which produces the
monthly report.
Sales of town homes, condos, co-ops and single-family houses fell 6.4
percent from November to an annual rate of 4.99 million, seasonally adjusted,
the lowest level since November of 2015.
The result fell far below the 5.25 million that economists had been
expecting and put the month a dizzying 10.3 percent below December of 2017.
“The housing market is obviously very sensitive to mortgage rates,” NAR
Chief Economist Lawrence Yun said in a statement.
“Softer sales in December reflected consumer search processes and contract
signing activity in previous months when mortgage rates were higher than
today. Now, with mortgage rates lower, some revival in home sales is expected
going into spring.”
The median home prices rose 2.9 percent year on year, marking the 82nd
straight month of gains, to $253,600.
Supplies also shrank to 1.55 million units, down from 1.74 million in
November. And at the current sales rate, this amounted to an inventory of 3.7
months, down from 3.9 months in November.
Ian Shepherdson of Pantheon Macroeconomics said cold weather in November
had helped depressed contract-signing, which was then reflected in lower
sales closing in December.
But a rise in mortgage applications suggested sales could soon rise again,
he said in a client note.
“Looking forward, the scope for a hefty rebound is very clear, and we
expect the first quarter’s sales numbers to surprise to the upside.”
Wall Street appeared unmoved by the news, with major stock indices already
trending downward toward 1600 GMT on fears the global economy may be slowing.
BSS/AFP/HR/1012