Existing home sales collapsed 4.9% in January to their lowest rate in nine months, falling well below analyst expectations, led by a massive drop in western region, according to the National Association of Realtors.
All major regions experienced declines in January, with the Northeast and West seeing the largest.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 4.9% to a seasonally adjusted annual rate of 4.82 million in January from an upwardly-revised 5.07 million in December.
“January’s drop in existing home sales is a bit concerning,” said Bill Banfield, vice president at Quicken Loans. “Economic indicators and stubbornly-low interest rates would lead most to expect improvement, yet recent housing reports have indicated the opposite. Inventory is a number I’ll be watching in the coming months as it has the power to help existing sales bounce back.”
Lawrence Yun, NAR chief economist, says the housing market got off to a somewhat disappointing start to begin the year with January closings down throughout the country.
“January housing data can be volatile because of seasonal influences, but low housing supply and the ongoing rise in home prices above the pace of inflation appeared to slow sales despite interest rates remaining near historic lows,” he said. “Realtors are reporting that low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delay decisions.”
Total housing inventory at the end of January increased 0.5% to 1.87 million existing homes available for sale, but is 0.5% lower than a year ago. Unsold inventory is at a 4.7-month supply at the current sales pace – up from 4.4 months in December.
The slowdown in mortgage purchase applications is alsoweighing on analysts. Mortgage purchase apps have faltered, and that limits upside risk for mortgage rates, according to the analyst team lead by Chris Flanagan atBank of America/Merrill Lynch.