Home Sales Dropped in December; Price Increases Slowed
Home Sales Dropped in December; Price Increases Slowed
Decline of 6.4% suggests sluggishness in the housing market may persist into 2019
December capped the weakest year for home sales since 2015. Photo: Keith Srakocic/Associated Press
87 Comments
By
Laura Kusisto
Updated Jan. 22, 2019 1:47 p.m. ET
Home sales fell sharply in December to their weakest level in more than three years, a difficult end to a weak year for the housing market and fresh evidence of a bumpy ride to come in 2019.
Existing-home sales fell 6.4% in December from the previous month to a seasonally adjusted annual rate of 4.99 million, the National Association of Realtors said Tuesday. Compared with a year earlier, sales in December declined 10.3%.
December capped the weakest year for home sales since 2015. Buyers pulled back in the latter half of 2018, as rising mortgage rates, high home prices, a volatile stock market, concerns that prices would start declining and anxiety about the national political situation all caused a number of buyers to hit pause.
Suffering SalesAnnual home sales declined in all but onemonth in 2018Sales of previously owned U.S. homes,change from a year earlierSource: National Association of Realtors via HaverAnalytics%
2014’15’16’17’18-15-10-505101520
Economists said that broader anxiety about the stock market and volatile political news helps explain why buyers reacted so strongly to the rise in mortgage rates, which remain low by historical standards. That suggests that even if mortgage rates ease, there is unlikely to be a return to the frenzied market of early last year.
“Certainly we’re in a mental recession. It’s a constant stream of negative headlines for a couple of months. We’re humans and it wears on you,” said Sam Khater, chief economist at Freddie Mac.
Price growth also slowed significantly in December, a sign that as sellers struggle to sell their homes many are starting to cut prices or ask for a more conservative number. That could be good news for buyers, many of whom have been on the sidelines because they can’t afford higher prices or were worried about another housing bubble.
Home-price growth hit a six-year low in December, growing just 1.2%, according to real-estate brokerage Redfin.
“It is unlikely that home prices nationally are likely to go down in 2019. It is likely that home prices will show a marked deceleration,” said Tom Lawler, founder of Lawler Economic and Housing Consulting. Mr. Lawler said prices over the year could end up growing slower than incomes—meaning only a couple of percent.
The decline in sales was broad-based with many markets seeing double-digit declines, including Seattle, Portland, Ore., much of California, Denver, Maryland, Delaware and the Philadelphia area, according to an analysis of local multiple listing service data by Lawler Economic and Housing Consulting.
Lindsay Cunningham and Ryan Brim bought a new townhouse in Philadelphia’s trendy Fishtown neighborhood in early December about $40,000 below the initial asking price and got an additional $10,000 seller concession.
The couple, who are in their late 20s, had started looking in the spring and already had seen rates climb from about 4% to more than 4.5%—or an increase in their monthly payment of about $120. That forced them to stretch a bit financially but Mr. Brim, who works as a mortgage broker, was worried about waiting because he thought rates would keep going up.
“I thought we can afford this, even if we might be stretched thin,” Mr. Brim said.
The couple’s Realtor, Ashley Lauren Farnschlader, said Ms. Cunningham and Mr. Brim were an exception last fall and many of her clients were holding off on buying. In the first couple of weeks of this year, she said buyers have seemed more enthusiastic as mortgage rates have eased and she is hopeful it will translate into more sales.
“I think this is a needed correction and it opens up a lot of hope and opportunities for first-time buyers,” she said.
The market is continuing to shift quickly and it is difficult to predict whether December’s numbers indicate deepening problems for the housing market or if things could rapidly shift again as mortgage rates have eased off in recent weeks.
—Sarah Chaney contributed to this article.
Home Sales Dropped in December; Price Increases Slowed
Decline of 6.4% suggests sluggishness in the housing market may persist into 2019
December capped the weakest year for home sales since 2015. Photo: Keith Srakocic/Associated Press
87 Comments
By
Laura Kusisto
Updated Jan. 22, 2019 1:47 p.m. ET
Home sales fell sharply in December to their weakest level in more than three years, a difficult end to a weak year for the housing market and fresh evidence of a bumpy ride to come in 2019.
Existing-home sales fell 6.4% in December from the previous month to a seasonally adjusted annual rate of 4.99 million, the National Association of Realtors said Tuesday. Compared with a year earlier, sales in December declined 10.3%.
December capped the weakest year for home sales since 2015. Buyers pulled back in the latter half of 2018, as rising mortgage rates, high home prices, a volatile stock market, concerns that prices would start declining and anxiety about the national political situation all caused a number of buyers to hit pause.
Suffering SalesAnnual home sales declined in all but onemonth in 2018Sales of previously owned U.S. homes,change from a year earlierSource: National Association of Realtors via HaverAnalytics%
2014’15’16’17’18-15-10-505101520
Economists said that broader anxiety about the stock market and volatile political news helps explain why buyers reacted so strongly to the rise in mortgage rates, which remain low by historical standards. That suggests that even if mortgage rates ease, there is unlikely to be a return to the frenzied market of early last year.
“Certainly we’re in a mental recession. It’s a constant stream of negative headlines for a couple of months. We’re humans and it wears on you,” said Sam Khater, chief economist at Freddie Mac.
Price growth also slowed significantly in December, a sign that as sellers struggle to sell their homes many are starting to cut prices or ask for a more conservative number. That could be good news for buyers, many of whom have been on the sidelines because they can’t afford higher prices or were worried about another housing bubble.
Home-price growth hit a six-year low in December, growing just 1.2%, according to real-estate brokerage Redfin.
“It is unlikely that home prices nationally are likely to go down in 2019. It is likely that home prices will show a marked deceleration,” said Tom Lawler, founder of Lawler Economic and Housing Consulting. Mr. Lawler said prices over the year could end up growing slower than incomes—meaning only a couple of percent.
The decline in sales was broad-based with many markets seeing double-digit declines, including Seattle, Portland, Ore., much of California, Denver, Maryland, Delaware and the Philadelphia area, according to an analysis of local multiple listing service data by Lawler Economic and Housing Consulting.
Lindsay Cunningham and Ryan Brim bought a new townhouse in Philadelphia’s trendy Fishtown neighborhood in early December about $40,000 below the initial asking price and got an additional $10,000 seller concession.
The couple, who are in their late 20s, had started looking in the spring and already had seen rates climb from about 4% to more than 4.5%—or an increase in their monthly payment of about $120. That forced them to stretch a bit financially but Mr. Brim, who works as a mortgage broker, was worried about waiting because he thought rates would keep going up.
“I thought we can afford this, even if we might be stretched thin,” Mr. Brim said.
The couple’s Realtor, Ashley Lauren Farnschlader, said Ms. Cunningham and Mr. Brim were an exception last fall and many of her clients were holding off on buying. In the first couple of weeks of this year, she said buyers have seemed more enthusiastic as mortgage rates have eased and she is hopeful it will translate into more sales.
“I think this is a needed correction and it opens up a lot of hope and opportunities for first-time buyers,” she said.
The market is continuing to shift quickly and it is difficult to predict whether December’s numbers indicate deepening problems for the housing market or if things could rapidly shift again as mortgage rates have eased off in recent weeks.
—Sarah Chaney contributed to this article.