Economic Snapshot: Existing-home sales reach lowest rate in nine months, increase year-over-year

While existing-home sales declined in January, we are still seeing year-over-year sales and price gains. The most important numbers to watch will be inventory, which remains low at 0.5 percent below 2014.

New home sales, while seeing a minuscule dip this month, remain at their highest levels since December 2007 and consumer confidence is stronger than pre-recession levels, despite this month’s decline.

Existing home sales

Existing-home sales declined 4.9 percent in January to a seasonally adjusted annual rate of 4.82 million, reaching their lowest rate in nine months. However, sales are 3.2 percent higher year-over-year and are up annually for the fourth consecutive month.

Total housing inventory increased 0.5 percent to 1.87 million existing homes available for sale but is 0.5 percent lower than January 2014. Unsold inventory is up from a supply of 4.4 months in December to 4.7 months in January at the current sales rate.

The median existing-home price for all housing types in January was $199,600, 6.2 percent above January 2014. This marks the 35th consecutive month of YOY price gains.

All regions experienced declines in January, with the Northeast and West seeing the sharpest. Existing-home sales in the Northeast fell 6.0 percent to an annual rate of 630,000 but remain 3.3 percent above January 2014. The median price in the Northeast was $247,800, 2.7 percent above the previous year.

Existing-home sales in the West dropped 7.1 percent to an annual rate of 1.04 million but are still 1.0 percent above the previous year. The median price in the West was $291,800, which is 7.2 percent above January 2014.

Sales in the South decreased 4.6 percent to an annual rate of 2.07 million in January but remain 5.6 percent above the previous year. The median price in the South was $171,9000, up 7.4 percent YOY.

In the Midwest, existing-home sales declined 2.7 percent to an annual rate of 1.08 million in January but are still 0.9 percent higher than January 2014. The median price in the Midwest was $151,300, an increase of 8.2 percent from the previous year.

New home sales

New single-family home sales were at a seasonally adjusted annual rate of 481,000 in January, 0.2 percent below the upwardly revised December rate of 482,000 and 5.3 percent above the January 2014 estimate of 457,000. New home sales in December 2014 were at their highest level since December 2007.

The median sales price of new houses sold in January was $294,300 and the average sales price was $348,300. The seasonally adjusted estimate of new houses for sale at the end of January was 218,000, representing a supply of 5.4 months at the current sales rate.

Consumer confidence

As reported earlier this week, consumer confidence declined to 96.4 in February from an upwardly revised 103.8 in January. However, this reading is still much higher than pre-recessions levels and a considerable improvement from 78.3 the previous year.

The Present Situation Index decreased to 110.2 from 113.9 while the Expectations Index declined to 87.2 from 97.0 in January.

Consumers who said business conditions are “good” decreased to 26.0 from 28.2 percent. However, those claiming business conditions are “bad” also decreased to 17.0 from 17.3 percent.

Confidence in the job market is somewhat less positive this month. Those who said jobs are “plentiful” declined to 20.5 from 20.7 percent and those claiming jobs are “hard to get” increased to 26.2 from 24.6 percent.

Optimism about the short-term outlook has also declined slightly. Those who expect business conditions to improve over the next six months decreased to 16.1 from 18.9 percent and those expecting business conditions to worsen increased to 8.7 from 8.2 percent.

Those anticipating more jobs in the months ahead fell to 13.4 from 17.3 percent; however, those anticipating fewer jobs also declined to 14.3 from 14.8 percent. The proportion of consumers expecting personal income growth declined to 15.1 from 19.5 percent while those expecting a decrease rose to 12.0 from 10.8 percent.