The winter months have not been kind to home sales.
After plunging 17 percent in December, Existing Home Sales fell by an additional 7 percent in January, according to the National Association of Realtors®. An “existing home” is a home resold by a previous owner (i.e. not new construction).
In looking at the annualized, adjusted Existing Home Sales data, we find:
- Sales volume is at its lowest levels since June 2009
- Sales volume fell below its 12-month rolling average
- Home supplies are at a 5-month high
These are similar findings to the New Home Sales data issued by the government last week. That report put new home sales at a 40-year low and showed new homes supplies higher by an entire month.
But don’t think housing rebound has halted! Home sales are cyclical and there are outside forces on today’s market.
For one, the market is still feeling the after-effects of the original First-Time Home Buyer Tax Credit. Sales spiked in the months leading up to the original November 2009 expiration date. A pull-back is natural and expected.
Looking at the long-term trend, Existing Home Sales volume appears right in line.
Furthermore, weather across much of the U.S. was awful in January. That, too, can impede home sales as homes are neither shown nor negotiated when weather is majorly inclement.
Anecdotal evidence is showing sales activity higher through February and into March. And, although it’s unlikely we’ll see a spike through April like we did last November, buy-side demand for homes should remain strong. The good news of the sagging sales reports is that today’s buyers may find home prices are lower and sellers are more willing to negotiate.