Housing sales dropped 7 percent nationwide as demand for homes declined significantly. That is the bad news, but there is good news.
Housing prices did rise 4.6 percent compared to December, 2012.
So what happened. The reduction in foreclosure inventory and overall inventory has created a bit more scarcity in the marketplace. Odds are the low hanging fruit that the investment real estate community has been buying up has diminished enough to show up in the housing sales statistics.
For homeowners this is actually good news. If the housing market is strong enough that investors are having to pay a premium it means that homeowners will be in a stronger position when it comes time to sell.
Of course, the real estate industry is full of world class spinners when it comes to interpreting the good or bad news that it is always time to buy, so it may make sense to watch the market and see if the downward sales trend will continue or if this is truly a function of a shrinking inventory.
The economic pressures of higher health insurance costs, tax increases, unemployment, and inflationary pressures on the housing market need to be watched going forward.
Economists polled by Reuters had expected new home sales, which are measured when contracts are signed, to slow to a 457,000-unit pace in December.
The second straight month of declines in sales was likely payback after October’s outsized 14.9 percent increase and may have reflected some drag from cold weather that blanketed most parts of the country last month.
Sales in the Northeast, which was hard hit by frigid temperatures, tumbled 36.4 percent to their slowest pace since June 2012. Home sales are traditionally weak during the winter, and last month’s cold snap could have exaggerated the magnitude of the slowdown.
New home sales were up 4.5 percent, compared with December 2012. For all of 2013, a total of 428,000 single family homes were sold. That was the most since 2008 and represented a 16.4 percent increase from the 2012.
Last month, the supply of houses on the market fell 2.8 percent to 171,000 units. That was the lowest since July. via CNBC