After NAHB's optimism rebounded sharply earlier this week, all eyes are on this morning's existing home sales data for any signs of optimism. Alas, with consensus expecting a tiny rebounding in January following December's sharp drop, the deterioration in the US home market continued continued, and January existing home unexpectedly dropped 1.2% (exp. +0.2%), to 4.94 million, missing expectations of a rebound to 5.00 million.
After December's revision higher to 5.00 million, the January SAAR of 4.94 million was the first sub-5MM print since 2015, while the parallel pending home sales series confirms even more weakness is in store.
Needless to say, it is very troubling that Americans are unable to afford home purchases with the 30% mortgage at just 4.5%, and suggests that even if inflation picks up, the Fed may have no choice but to keep rates flat to avoid a housing market crash.
As usual, NAR chief economist Larry Yun was optimistic, saying that he does not expect the numbers to decline further going forward. "Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low. Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months."
One wonders what "gains in household income" he is talking about.
Meanwhile, properties are failing to sell as the slowdown spreads: Properties remained on the market for an average of 49 days in January, up from 46 days in December and 42 days a year ago. Thirty-eight percent of homes sold in January were on the market for less than a month.
Still, despite the ongoing slowdown, or perhaps adding to it, the median existing-home price rose once again, hitting $247,500, up 2.8% from January 2018 ($240,800). January’s price increase marks the 83rd straight month of year-over-year gains.
Even so, Yun noted that this median home price growth was the slowest since February 2012, and is cautions that the figures do not yet tell the full story for the month of January. “Lower mortgage rates from December 2018 had little impact on January sales, however, the lower rates will inevitably lead to more home sales.”
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The money that was once used to buy a house is being used to pay off student loans. As soon as they started giving loans for college the prices sky rocketed. College professors are making huge salaries and so are the Deans. Is it really worth the price you pay?
ReplyDeleteNo it is not. If an individual is really interested in obtaining a college degree why does it take so long. One or two classes a day and then all play.
DeleteIt's a combination of student loan debt, low wages, and high housing prices.
ReplyDeleteMy young adult children are still living at home with me because of this.
Even the cost of renting an apartment is more than two weeks pay. It you have student loan debt, car payments, and rent or a mortgage, there is no way you can get by unless you work two or three jobs, or share your apartment or housing costs with someone else and good luck on them coming up with their share of the bill.
Without us realizing it, we have become a third world country. The middle class is dead. In this country it's only the very rich and the very poor and very little in between.
Sad story but I'm not buying it. Today's kids want it all now. 1,000.00 + phones, expensive vacations, big weddings, eating out frequently. Buying expensive cars, clothes. Lol living at home - no rent or mortgage payments, no electricity, food, cable, insurance payments. If no work opportunities in your city or town move to the city - get a roommate and earn a living. It works. Parents don't want their kids to move out. A shame not to let them to grow up.
DeleteCollege education has skyrocketed because the lawmakers are profiting from it. My dad put himself through college as a mechanic back in the 70's. Nothing wrong with labor jobs but to stay globally competitive we need college educations. Perhaps if governments would stop accepting massive payouts by the loan sharks we could get some decent education reforms passed.
ReplyDeleteMillenials have to deal with the aftermath of the baby boomer economy where the future was not planned for. They seem so radical because they not only have to correct the damages of previous generations but have to prevent those in the future.
Old buyers can't afford their homes. People are going to be in shock when they do their taxes this year.
ReplyDeleteSo raise the minimum wage so that people will then be able to afford a home (that’s sarcasm)!!!
ReplyDeleteGive us back our tax deductions you stole from us without
ReplyDeletetelling us all year !!!
We got screwed big time while companys got big breaks !!!