Data released today showed that in the US total home sales fell 1.2% in January. Analysts at Wells Fargo explain data points to an extension of the trend of weak home buying activity, but they see that lower mortgage rates hint to a modest improvement in coming months.
“Existing home sales continued to be weak in January. Total sales fell 1.2% to a 4.94 million-unit pace, somewhat below consensus estimates and the third consecutive monthly decline. While winter months are notoriously volatile and difficult to interpret due to large seasonal factors, home buying activity continues to trend lower.”
“Slower sales have led to homes sitting on the market for longer. Homes stayed on the market for an average of 49 days in January, up from 46 days in December and 42 days a year ago.”
“That home sales were somewhat weak in January comes as little surprise. For the first time since 2010, mortgage rates nearly breached 5.0% in November. Amid higher rates, pending home sales, which are based on signed contracts and lead existing sales by one to two months, slowed in the final months of 2018. The partial government shutdown likely had little direct impact on January sales, but delays in the mortgage underwriting process may slightly weigh on sales in coming months.”
“While affordability issues remain, home prices continue to moderate and mortgage rates have plunged over 50 basis points to start the year. The labor market also remains incredibly resilient, and wage growth continues to track higher. Taken together, these factors point to a modest improvement in existing home sales for 2019.”