The housing market in the United States was dealt another blow as existing home sales declined by 5.1 percent in January, marking the lowest level in more than a year. The print was expected to be bad as many already gave it a bad weather label, but the weather was not the sole culprit.
Lawrence Yun, chief economist of the National Association of Realtors, said “the poor weather wasn’t completely to blame for the drop in activity,” referring to the lack of affordability in home prices and higher mortgage rates. The median home price increased 10 percent year-over-year to $188,900 in January.
Purchases increased at a rate of 4.62 million annually in January, falling short of the 4.73 million general consensus. December’s 4.87 million rate was not revised. Interestingly enough, the decline was led by the West which was impacted less from the abnormally cold temperatures, declining by 7.3 percent.
To exaggerate the lack of affordability in home prices, first-time buyers only accounted for 26 percent of all purchases. This was the lowest level since record keeping in 2008. The national average 30-year fixed-rate mortgage is 4.33 percent in the week ending on February 20, down from the average of 4.53 percent in the beginning of 2014.