Is it time to panic?! New home sales dip in January… but we’re going to be okay.
By Matt Joy, Princeton Mortgage Wholesale
As we head into the last month of the quarter it seems to me that all we’ve heard about in the industry are the rising interest rates, low housing inventory, tax reform, slim margins, blah blah blah… Well, let’s go ahead and add one more negative connotation to the mix as January marks the second consecutive month of declines in new home sales. Great, as if we needed another topic to drone over for the next few months until the weather breaks here on the East Coast. Speaking of weather… Chief Economists and Macro Advisors are attributing weather as a key factor in the decline of new home sales. Woah, woah, woah… do you mean to tell me that the weather on the East Coast during December, January and February is preventing home buyers from shopping and home builders from building (this sentence is dripping in sarcasm btw)?!
Truth is… it’s too early in the year to make a fuss over such a small pocket of the purchase volume. The reason we’re even making a stink about it, is because these economy “experts” predicted a much stronger push for new home sales to start off the new year and we saw a large increase in the number of construction jobs added to the work force during the jobs report. Here are the numbers for new home sales… 593,000 new, single-family homes were sold in January. That’s a decrease of 7.8% from December’s rate of 643,000 and down 1% from the January estimate in 2017. You can find more information about the exact numbers in MSNBC’s report here.
Let’s bring it full circle now… rising interest rates, low housing inventory (for now at least… new home supply reached its highest level since 2014… so this low housing inventory argument is getting old fast) tax reform, slim margins, blah blah blah have all played a part in the slow start of 2018. I think we can all agree that economy is strong, right? I mean at least on paper it is… and we did increase wages, right? So here is a thought… and I could be reaching on this… BUT, do you think that once these tax refunds hit and then the wage increase start to make a difference in take home pay… that maybe, just maybe we’ll see the industry catch fire a bit? Oh, I forgot… the weather. I’m not meteorologist or anything, but my guess is that the weather will start to clear up on the East Coast at the end of March/beginning of April… and to think all I needed to predict that was my trusty Farmer’s Almanac I bought at Lowe’s for $4.35.
Talk to you soon,
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.