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First Cut: December Existing Home Sales end 2018 on a down note

Sales of existing homes fell 6.4% in December to 4.99 million units (SAAR), ending 2018 on a down note and the first time below the 5-million mark in about three years. Sales were down for both single-family units (down 5.5% to 4.45 million) and multi-units (down 12.9% to 540,000). The housing market continued to be constrained by higher prices, higher interest rates, and limited supply of the more sought-after units at the lower price-point of housing stock.

Prices were off a bit month-over-month with the median price down 1.4% in December from November but it was up 2.9% compared to a year-ago.

Sales were flat-to-down across regions in December from November. Sales in the Northeast were unchanged, down 2.8% in the South, down 6.3% in the Midwest, and down 8.1% in the West. Some of this may be a hangover after the hurricanes in the Southeast in September and October and massive wildfires in California, all of which destroyed housing stock that may only just be being rebuilt. Nonetheless, the underlying trend for home resales has softened in recent months.

While there is no immediate evidence that the present partial government shutdown has had an impact on home sales, times of uncertainty tend to keep consumers out of the housing market. It is probable that 2019 is going to get off to a shaky start. If the shutdown is resolved soon, it could mean that the normal spring rush in homebuying could rebound. However, some of that will depend on a quick resolution and mortgage interest rates holding nearer the dip in January to around 4.50% after the 4.64% in December and 4.87% in November.

 

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