U.S. Home Sales Post 12th Straight Monthly Decline

WASHINGTON—U.S. WASHINGTON–U.S. Housing Market slump could be on the verge of reaching its bottom.

The National Association of Realtors’ Tuesday report also showed the lowest increase in annual home prices since 2012, which should be good news for affordability. But it won’t be long before the housing markets turns the corner.

After strong retail sales and labor market data, as well as strong monthly inflation readings, mortgage rates have started to trend upwards. This raises the possibility of the Federal Reserve continuing its interest rate hike campaign through the summer.

The seasonally adjusted annual rate for existing home sales was 4.00 million units, down 0.7 percent from October 2010. This is the lowest level since October 2010, when the country was facing foreclosure crisis. It was the 12th straight month of sales drops, which is the longest such streak since 1999.

The Northeast and Midwest saw sales declines, while the South and West saw growth. Reuters polled economists and predicted that home sales would rise to 4.10 million units. The largest portion of U.S. home sales was made through resales in January. They plunged 36.9% year-on–year.

The Fed’s aggressive monetary tightening has caused the largest damage to the housing market. Residential investment contracted seven quarters straight, the longest streak of this kind since 2009.

According to government data, single-family homebuilding declined in January.

According to data from Freddie Mac, the 30-year fixed mortgage rate increased to 6.32 percent on average last week, from 6.12 percent in the previous week. The U.S. Treasury yields spiked, resulting in the second consecutive weekly rise.

Stocks in the United States were lower. The dollar held steady against a basket currency. U.S. Treasury prices declined.

We are hopeful signs

There are some rays that there is hope. However, there are some rays of hope. In February, homebuilders were confident at a five-month peak. Morale is still low. The median current house price rose by 1.3 percent to $359,000 in February, up from $359,000 a year ago. This was due to lower asking prices by homeowners whose properties had been on the market longer than usual. This was the smallest annual increase since February 2012.

The average property stayed on the market for 33 days last months, compared with 26 days in December.

“Buyers are beginning to have better negotiating power,” Lawrence Yun, chief economist at NAR, said that “Homes sitting on the market for more than 60 days can be purchased for around 10 percent less than the original list price.”

The number of homes that were previously owned was 980,000, an increase of 2.1 percent over December and 15.3 per cent from one year ago. This was mostly due to homes remaining on the market for longer periods than they were in previous months. There were no new listings.

It would take 2.9 months for the inventory of homes to be sold at January’s pace, up from 1.6 months last year. A healthy balance between supply & demand is considered to be a supply of four to seven months.

In January, fifty-four percent sold homes that had been on the market for less then a month. The number of first-time buyers was 31 percent, up from 27 per cent a year ago. 29 percent of transactions involved cash, compared with 27 percent in the previous year.

The housing market is still looking for a floor but business activity rebounded in February. According to a Tuesday survey, it reached its highest level in eight years.

S&P Global reported that its flash U.S. composite PMI Output Index (which tracks the manufacturing- and services sectors) increased to 50.2 from 46.8 in January.

The index has now been below 50 for seven consecutive months. This indicates that the private sector is in decline. The rise in business activity was largely due to the services sector, while manufacturing remained weak. Reuters polled economists and predicted that the index would reach 47.5.

This rebound in business activity is consistent with recent strong retail sales, the labor force market and manufacturing production data that have indicated solid momentum in the Economy At the beginning of the year.

“The economy is finding its balance,” Jeffrey Roach is the chief economist at LPL Financial, Charlotte, North Carolina.