Soft Home Sales in the West, but Conditions Look Good for Spring Sales Season
- New Home Sales for January sagged, down 9.2 percent to a 494,000 unit annual rate.
- Existing Home Sales in January were essentially unchanged, up 0.4 percent to a 5.47 million unit rate.
- The U.S. National Case-Shiller House Price Index was up 5.4 percent in December over a year earlier.
New home sales in January were softer than expected, down 9.2 percent for the month, to a 494,000 unit annual rate. Our first thought was weather in the Northeast, but the regional pattern confounds that argument. New homes sales in the Northeast actually increased by 3.4 percent for the month. The Midwest saw a 5.9 percent drop and the South was up by 1.8 percent. It was the West that fell out of bed in January, with new home sales down 32.1 percent. A scan of California realtor news reveals nothing exceptional for the month. So we will view this as an anomaly for now, and expect new home sales to rebound next month. The months’ supply of new homes on the market increased to 5.8 months’ worth. The median sales price for a new home was down 4.5 percent for the year, consistent with a shift toward middle market homes.
Existing home sales were little changed in January, gaining just 0.4 percent to a 5.47 million unit annual pace. The regional pattern reflects what we saw in the new home market. The Northeast posted a gain of 2.7 percent. Existing home sales in the Midwest were up 4.0 percent. The South was unchanged for the month, while the West was soft, dropping 4.1 percent for the month. The months’ supply of existing homes for sale was a tight 4 months’ worth in January. The median sales price of an existing home was up 8.2 percent in January over the previous year. The combination of strong job growth, wage gains, low mortgage rates and still ample pent-up demand look favorable for the upcoming spring home buying season. New mortgage products designed to lower barriers for first time buyers are an interesting development.
The S&P/Case-Shiller U.S. National House Price Index gained 0.1 percent in December and was up 5.4 percent for the year. Dallas home prices gained 9.6 percent over the previous 12 months. Detroit was up 7.1 percent. Los Angeles gained 6.2 percent. Miami was up 7.1 percent. Phoenix increased by 6.3 percent. San Diego gained 7.2 percent. San Francisco was up 10.3 percent.
Market Reaction: U.S. equity markets dipped at the open. The 10-year Treasury bond yield is down to 1.66 percent. NYMEX crude oil is down to $31.03/barrel. Natural gas futures are up to $1.83/mmbtu.
For a PDF version of this Comerica Economic Alert click here: Existing _Home Sales 02-24-16.