Home Sales Continue to Lose Steam

Existing home sales fell 5.1% in January from 4.87M to a 4.62M unit pace. Single family sales fell nearly 6% in January, the fifth monthly decline in six, dropping from 4.3M to a 4.05M unit pace. Condo/Co-op sales, on the other hand, were unchanged at the start of the year, holding steady at 0.57M.

As sales waned in January, months’ supply rose from 4.6 to 4.9 months. Single family supply rose from 4.6 to 5.0, while condo supply declined from 4.7 to 4.3 in January.

The median price of a previously owned home fell from $198k to $189k in January, but remains in the black on an annual basis, up 10.7% over the past twelve months.

On a regional basis, existing home sales fell in all four regions at the start of the year. Sales fell over 7% in the Midwest and West, and dropped over 3% in the Northeast and the South.

Bottom line: As we saw with other disappointing housing-related reports earlier this week - permits down 1.6%, starts off 4.9% - activity in the U.S. housing market continues to pull back. While still positively contributing to growth, housing activity from both a supply and demand standpoint has slowed after a ramp up in activity in the earlier part of 2013 amid a threat of rising rates - recall the Fed initiated taper talk back in May of last year sparking a "taper tantrum," which pushed yields up over 100bps within months.

Going forward with tepid job creation and minimal income growth, new homebuyers will struggle to accumulate the down payment necessary to make a home purchase, further slowing housing market activity.

Source: Stern, Agee & Leach Inc.


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