With home price growth at the slowest rate since 2012, rates falling, and existing home sales having rebounded notably, pending home sales are expected to slow very modestly in February after rebounding in January, but they fell more than expected.
Pending Home Sales fell 1.0% MoM (against expectations of a 0.5% decline)
Lawrence Yun, NAR chief economist, is (surprise, surprise) optimistic...
“In January, pending contracts were up close to 5 percent, so this month’s 1 percent drop is not a significant concern,” he said.
“As a whole, these numbers indicate that a cyclical low in sales is in the past but activity is not matching the frenzied pace of last spring.”
Yun added that despite the growth in the West, the region’s current sales are well below the sales activity from 2018.
“There is a lack of inventory in the West and prices have risen too fast. Job creation in the West is solid, but there is still a desperate need for more home construction.”
Yun pointed to year-over-year increases in active listings from data at realtor.com to illustrate the potential rise in inventory.
Denver-Aurora-Lakewood, Colo., Seattle-Tacoma-Bellevue, Wash., San Diego-Carlsbad, Calif., Portland-Vancouver-Hillsboro, Ore.-Wash., and Nashville-Davidson-Murfreesboro-Franklin, Tenn., saw the largest increase in active listings in February compared to a year ago. Yun added that he does not anticipate any interest rate increases from the Federal Reserve in 2019.
“If there is a change at all, I would say the Fed will lower interest rates in 2019 or 2020. That would stimulate the economy and the housing market,” he said.
“But the expectation is no change at all in the current monetary policy, which will help mortgage rates stay at attractive levels.”
However, this is the 14th month in a row of annual declines in pending home sales...
This is the longest stretch of declines since 2008.