December Existing-Home Sales was down from the previous month’s 5.33M to a seasonally adjusted annual rate of 4.99 million units.
Lawrence Yun, NAR’s chief economist, says current housing numbers are partly a result of higher interest rates during much of 2018. “The housing market is obviously very sensitive to mortgage rates. 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.” [Full Report]
I am not sure what any of this means. There were fewer home sales in St. Paul in 2018 than there were in 2017, yet there is still a shortage of homes for sale in St. Paul. Some months there were fewer than 300 homes for sale in the city which is very unusual. My theory has been that the reason for fewer home sales was because there were fewer homes for sale.
Higher interest rates can impact home sales but so can the lack of inventory. The inventory of homes for sale was at an all-time low in January 2018. This January the number of homes for sale is still very low but up 7% from last January.
When it comes to figuring out the housing market and the economy we usually figure out what happened after it happened and not before. Usually, I notice changes in the housing market about three months before they are reported by the media. Right now I am not seeing any changes in the market from a year ago but I am watching closely.