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US: Housing market will cool even further in coming months – Wells Fargo

Today’s data showed that US Existing home sales continued to slide in September, with closings tumbling a much larger than expected 3.4% during the month, explained analysts at Wells Fargo. They noted that sales fell throughout the country, and the median price of a home moderated as well.

Key Quotes:  

“Existing home sales declined 3.4% in September, marking the sixth consecutive month that sales have fallen. Existing home sales track closings, which tend to reflect contracts signed one to two months earlier, so the most recent drop is not likely related to disruptions from Hurricane Florence. Unfortunately, the slide in housing is the real deal. Virtually every leading indicator of housing demand has been trending lower for several months, including pending home sales, mortgage purchase applications and the proportion of consumers stating that now is a good time to buy a home.”

“Home price appreciation has also cooled off. The latest data show the median price of an existing home sold in September was just 4.2% higher than it was one year ago. The year-over-year change in the median price has been trending lower for the past six months, and the moderation in the NAR series is evident in other price measures from FHFA and S&P/Case Shiller.”

“We suspect the housing market will cool even further in coming months.”

“With sales falling for the past six months, however, we may not see as much of a fall off this winter as we usually do. As a result, the seasonally-adjusted data might pop higher for a month or two during the typically slow winter months. Such a rise would not signal any fundamental improvement.”

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