Blame it on your favorite weather scapegoat: Atmospheric cycles, Climate change, Punxsutawney Phil: winter is not nearly finished with us. This year’s frigid temperatures are perhaps a rebound reaction to make up this year what we lacked in cold and catastrophe last year. Whatever the reason, the cold wet weather is taking its typical toll on the housing market.
January’s home sales dropped a hair (0.4%) from December. This is after December’s sales dropped 1% from November, which had in turn dropped from September. It’s to be expected that the downward trend in home sales might continue to drop until warmer weather hits. There’s a reason statisticians like to hedge numbers in “seasonally adjusted” terms.
According to the National Association of Realtors “The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.”
Winter is a traditional low-time for housing sales. Between the traditional school season and year-end holidays, freezing temperatures and dangerous icy conditions, no one wants the hassle of a winter move. So unless it’s unavoidable, people tend to do their home buying and selling in milder months.
Last year the mild winter and early spring gave housing sales a much-needed boost during a stumbling recovery, pushing higher sales activity than typical for the winter season due to “abnormal weather patterns.”
This winter is not an exception to the traditional winter lull, but the statistics on the housing market are surprisingly good. While last winter showed slow and desperately needed steps toward recovery from the housing market crash, the depths of this long winter are showing something even more encouraging: we’re seeing activity in much more tune with the typical seasonal cycle of a healthy housing market. So while the market may be down from the fall, it is up (a lot!) from last year.
The National Association of Realtors’ January reports state existing home sales 9.1% above January 2012. Existing home inventory is listed at 4.2 months supply, which is the lowest housing supply we’ve seen since April of 2005! Meanwhile, interest rates on the 30-year fixed rate mortgage remain low, at 3.41%, up slightly from the record low of 3.35% seen at the end of 2012, but still a significant amount lower than the 3.92% on January 2012 (which was at that time also a record low). This limited inventory, combined with the continued low interest rates is responsible for the 12.3% rise in the national median sale price of all housing types over January of 2012. This rise marks the 11th month of year-over-year price increases, and the highest increase since November 2005 gained 12.9% over the previous year.
Granted that compared to last year, it wouldn’t take much to post an improvement, but the strong numbers in the midst of this fridge winter season are leading many experts to herald a market shift from buyer’s to seller’s, and anticipate further strengthening of home values in the spring, when traffic seasonally increases.
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About Tom Davidson — Tom Davidson is Vice President of Express Schools, LLC. which operates online education providers Real Estate Express, Insurance License Express and License Tutor. Follow him on Twitter.