Existing Home Sales Fall Sharply

Mortgage rates began to move down in December but it wasn't soon enough to help the month's resales. Existing home sales fell a sharper-than-expected 6.4 percent to a 4.990 million annualized rate that is the lowest in more than three years and barely makes Econoday's consensus range.

Weakness across the board is a fair description of the results with single-family sales down 5.5 percent to a 4.450 million rate and condo sales down 12.9 percent to 540,000. The weakest region in the data is the Midwest at an 11.2 percent decline with the West showing the least weakness at minus 1.9 percent.

For buyers, the bad news includes less selection as supply on the market fell 10.9 percent to 1.550 million units for sales. Relative to sales, supply is at 3.7 months vs 3.9 months in the prior month.

For sellers, the bad news includes a 1.4 percent decline in the median price to $253,600. And relative to sales, prices appear rich as the year-on-year median shows a gain of 2.9 percent vs what is a 10.3 percent decline in year-on-year sales.

Mortgage rates peaked in November and are since down about 40 basis points for 30-year fixed mortgages to roughly 4.75 percent. This move is very likely to help sales in January which will also get a comparison lift from what turned out to be a very weak December. The housing sector may have ended a soft 2018 on a down note but the outlook for 2019 -- as long as the labor market stays healthy and rates hold steady -- may well be positive.