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December's Sales Surprise

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December's Sales Surprise


January 23, 2019
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Photo: Unsplash/Brian Kraus

Existing home sales dropped 6.4 percent in December 2018, and the size of the change has shocked real estate professionals and experts.

Particularly since the swing was not prompted by any change in policy by the federal government, experts are not easily able to account for the drop. Lawrence Yun, chief economist for the National Association of Realtors, tells CNBC, "The latest decline is harder to explain. Perhaps it is the decline in consumer confidence that's been occurring in the latter half of 2018," adding, "The latest numbers do not reflect the lower, current mortgage rates compared to the November figures, so it's really harder to explain."

"While positive demographics and a solid job market would normally offset this relatively modest rise in mortgage rates, it's been about 10 years since mortgage rates have been as high as they were at the November peak – suggesting that there is a larger share of current homeowners who feel they are 'locked in' at a lower mortgage rate ... reducing the number of them who would be looking for a home at a higher mortgage rate," said David Berson, chief economist at Nationwide.

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