Existing home sales are forecasted to see a decline in February, according to the Ten-X Real Estate Nowcast.
Ten-X, an online real estate transaction marketplace, released its report, showing February existing sales will fall between seasonally adjusted annual rates of 5.34 to 5.69 million with a targeted number of 5.51 million.
This would be a decrease of 3% from January’s existing home sales reported by National Association of Realtors but up 7% from last year. Home sales in January hit their fastest pace in a decade, even surpassing Ten-X’s predicted increase.
“At some point, rising prices, higher interest rates, and limited inventory will begin to take their toll on home sales,” Ten-X Executive Vice President Rick Sharga said. “While online search activity remains strong, indicating healthy demand for homes, the relatively weak numbers in both new home sales and pending sales of existing homes suggest that buyers may be having trouble finding properties.”
“But monthly housing numbers are notoriously volatile, so it's too soon to say whether we're seeing an inflection point, or the market is just taking a breath before coming back strongly in the spring,” Sharga said.
And Ten-X isn’t the only one predicting a slow down in February home sales. After NAR released the Pending Home Sales report Monday, which showed a decrease in activity, experts predicted future home sales will be low.
This chart from Logan Mohtashami, AMC Lending Group senior loan officer and a prolific mortgage pundit, shows how pending home sales sets the path for existing home sales:
— Logan Mohtashami (@LoganMohtashami) February 27, 2017
Mitch Roschelle, partner at PricewaterhouseCooper, which focuses on audit and assurance, tax and consulting services, posted on Twitter “Like I have been saying – you can't buy a home that's not for sale.”
But despite the low pending home sales report, another expert disagrees with that notion, claiming the upcoming Spring home buying season will be hotter than ever.
“Based on realtor.com’s inventory and traffic in February, we are anticipating another month of record prices, record low inventory, and record inventory movement,” company Chief Economist Jonathan Smoke said. “Buyers have started the spring buying season early to get their dream home before competition grows in the traditionally stronger spring season – but competition is already heated and will only continue to become more intense.”
Ten-X predicts the median home sales price will fall between $220,056 and $243,220 in February, with a target price point of $231,638. This would be an increase of 1.2% from January and of 9.9% from last year.
“Though inventory constraints have hampered stronger sales growth and fueled a surge in prices, the housing market continues to benefit from healthy underlying demand bolstered by a solid labor market that boasts healthy job gains, low unemployment and wage growth," Ten-X Chief Economist Peter Muoio said.
“Looking forward, it's possible that higher mortgage rates may create yet another affordability obstacle for would-be homebuyers,” Muoio said. “In the meantime, 2017 home sales appear to be advancing at a healthy pace.”