by Calculated Risk on 2/21/2019 12:41:00 PM

Earlier: NAR: Existing-Home Sales Decreased to 4.94 million in January

A few key points:

1) The key for housing - and the overall economy - is new home sales, single family housing starts and overall residential investment. Unfortunately this key data has been delayed due to the government shutdown.  However, overall, this is still a somewhat reasonable level for existing home sales, and the weakness at the end of 2018 and early 2019 was no surprise given the increase in mortgage rates.

2) Inventory is still low, but was up 4.6% year-over-year (YoY) in January. This was the sixth consecutive month with a year-over-year increase in inventory, although the YoY increase was slightly smaller in January than in December.

3) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus. See: Lawler: Early Read on Existing Home Sales in January .   The consensus was for sales of 5.05 million SAAR, Lawler estimated the NAR would report 4.92 million SAAR in January, and the NAR actually reported 4.94 million SAAR.

Click on graph for larger image.

The current YoY increase in inventory is nothing like what happened in 2005 and 2006. In 2005 (see red arrow), inventory kept increasing all year, and that was a sign the bubble was ending.  This winter (light blue arrow), inventory is following the normal seasonal pattern.

Although I expected inventory to increase YoY in 2019, I also expected inventory to once again follow the normal seasonal pattern.

Also inventory levels remain somewhat low, and could increase more and still be at normal levels. No worries.

The second graph shows existing home sales Not Seasonally Adjusted (NSA).

Sales NSA in January (285,000, red column) were below sales in January 2018 (313,000, NSA), and sales were the lowest for January since 2015.