US Home Sales drop in December to the slowest pace since 2015 - Wells Fargo

Existing home sales in the US fell 6.4% in December to a 4.99 million-unit pace. Analysts at Wells Fargo, point out that home prices continue to ease amid softer sales.

Key Quotes: 

“Hopes of lower mortgage rates leading to a noticeable improvement in home sales were dashed during December. Existing home sales for the month broke a two-month string of positive gains and fell 6.4% to a 4.99 million-unit pace, well below expectations and the slowest pace since November 2015.”

“Housing market data for the winter months are notoriously difficult to interpret given the unusually large seasonal adjustment factors.” 

“There were a few bright spots in December’s report. Inventory levels fell 12.3% to 1.55 million, however increased 6.2% on a year-over-year basis. After declining on a year-over-year basis for 37 consecutive months, inventory levels have now risen in each of the past five months.”

“Home prices continued to moderate. The median existing single-family home price rose to $255,200, a 2.9% year-over-year increase. However, the increase marks the slowest increase since 2012. Given the rapid appreciation of prices seen earlier in the cycle, some moderation should benefit homebuyers as mortgage rates will likely continue to gradually trend higher in coming months.”

“The partial federal government shutdown, which began on December 22, likely had little impact on existing home sales during the month. However, a prolonged shutdown may cause delays in the mortgage underwriting process, which could potentially weigh on sales in coming months.”