EconoFACTS

February 21, 2023 | 10:37

U.S. Existing Home Sales Slide .... Again

Economist

Jennifer Lee

Senior Economist and Managing Director
Economics

(Read more)

Jennifer Lee

Senior Economist and Managing Director
Economics

(Read more)

12x a charm?

U.S. existing home sales unexpectedly fell in January, extending the losing streak to twelve months running, the longest since the data began decades and decades ago. At least the 0.7% was the smallest of the bunch. The monthly drop was in the Northeast and the Midwest, while the all-important South picked up for the first time since the start of the year. In any event, the resulting 4.00 mln units annualized is the lowest since October 2010. There were revisions going back three years; but they were nudged upward in the prior three months. Singles took the hit (-0.8%) while condos kept it together and stayed flat in January. The months' supply of homes available to be bought were little changed at 2.9, still far from normal levels of about 6.5, and thus, keeping prices above year-ago levels (+1.3% y/y) but the pace has clearly slowed dramatically. Recall the +20% y/y gains back in 2021.

Who was buying? There was little change in the composition of buyers. First-timers are bravely holding on with their 31% share, matching December's figure and the highest in 1½-years (but far from the roughly 40%-to-45% during normal times). Those with deep pockets picked up a bit. All-cash purchases accounted for 29%, the most in 8½ years (or since the summer of 2014). Those who have been to this rodeo before (repeat homebuyers) saw their share slip to a 12-year low of 40%.

Bottom Line: That slower demand from all of those rate hikes (all 450 bps) are having an impact, clearly.... on housing. The one sector that is feeling the pain. But things should ease up a little as the Fed cools it on the tightening path .... assuming it does.

Table 1 - United States — Existing Home Sales

(millions of units : a.r.)

Source: BMO Economics, Haver Analytics