January 2019 Existing Home Sales

Existing home sales suffered their third consecutive setback.  According to the National Association of Realtors (NAR), transactions fell 1.2 percent in January 2019 to 4.94 million units on a seasonally adjusted annualized basis; this is the worst reading since November 2015.   While a negative sign still accompanies it, this is an improvement compared to December’s upwardly revised fall of 4.0 percent (originally minus 6.4 percent).  Versus a year earlier, sales are off 8.5 percent.

Regional data were mixed.  Northeast sales improved 2.9 percent but remain 1.4 percent below a year ago.  Unfortunately, that was the only region with increasing sales.  Sales in the South declined 1.0 percent and are off 8.4 percent versus a year ago.  Meanwhile, Midwest transactions were 2.5 percent lower in January and 7.9 percent less than 12 months earlier.  Finally, transaction out West dipped 2.9 percent and are a whopping 13.8 percent below a year ago.

Sales volume wasn’t the only weakness in the report.  Price proxies were also lower.  The average price of a home fell 2.4 percent to $286,800.  Likewise, the median price fell 2.8 percent to $247,500.  Despite the month’s weaker sales volume and prices, the average and median prices are up 1.5 percent and 2.8 percent respectively from a year earlier.

Borrowing costs remain relatively cooperative.  According to Freddie Mac, the average commitment rate for a 30-year, fixed rate mortgage was 4.46 percent to start this year. This is a decline from 4.64 percent in December and below the 4.54 percent average for all of 2018.

Inventory levels increased in the period.  An additional 60,000 units were put up for sale in January.  At the current pace of sales, the 1.59 million units represent 3.9 months of sales, rising from 3.7 months in December.

Existing home sales seem to be in a period of weakness based on year-over-year trends.  However, the chief economist at the NAR, Lawrence Yun, doesn’t expect the current period of decline to last into next month.  Atlas isn’t convinced.  We’ll need to see a few months of improvement before sounding the all-clear signal for this marketplace.