Blame it on the snow

From Bloomberg:

Cooling U.S. Home Sales Only Partly Due to Weather: Economy

Sales of previously owned U.S. homes dropped in January to the lowest level in more than a year as harsh winter weather combined with a lack of supply, strict lending rules and declining affordability to depress demand.

Purchases decreased 5.1 percent to a 4.62 million annual rate last month, the fewest since July 2012, figures from the National Association of Realtors showed today in Washington. Sales fell in all four regions of the country, indicating unusually frigid temperatures were only partly to blame.

The median forecast of 79 economists surveyed by Bloomberg projected sales would drop to a 4.67 million rate. Estimates ranged from a 4.5 million pace to 4.9 million. December’s figure was unrevised at a 4.87 million pace.

Compared with a year earlier, purchases decreased 5.1 percent in January on an adjusted basis, today’s report showed. The median price of an existing home increased 10.7 percent from a year earlier to $188,900 in January.

The drop in sales was led by a 7.3 percent slump in the West, followed by a 7.1 percent decrease in the Midwest.

First-time buyers accounted for 26 percent of all purchases in January, the lowest in data going back to October 2008.

The number of existing properties on the market rose 7.3 percent from a year earlier to 1.9 million in January. At the current pace, it would take 4.9 months to sell those houses compared with 4.6 months at the end of December.

This entry was posted in Economics, Housing Recovery, National Real Estate. Bookmark the permalink.

58 Responses to Blame it on the snow

  1. grim says:

    From the WSJ:

    U.S. Existing-Home Sales Fell in January

    A broad measure of home sales fell sharply in January, the latest sign the housing market is buckling under higher mortgage rates, tight inventory and severely cold weather.

    Sales of previously owned homes fell 5.1% in January from December to a seasonally adjusted annual rate of 4.62 million, the National Association of Realtors said Friday. The drop, the fifth in the past six months, pushed sales down to the lowest level in 18 months.

    The decline was steeper than economists’ expectations and raises new questions about the underlying strength of the housing market. Sales began slowing in the middle of last year, long before chilly winter and snowstorms gripped much of the U.S.

    Existing-home sales, which reflect more than 90% of all home purchases, fell across all four regions in January, but the biggest drop occurred in the West, which has been the warmest.

    “January existing home sales left much to be desired, but don’t blame it on the weather,” said Bill Banfield, vice president of mortgage lender Quicken Loans. “Low home inventories in various parts of the country don’t give buyers as many options as they would like right now, causing some to wait until their dream home comes along.”

  2. grim says:

    Just for clarification, HARP was the successful program, which included permanent modifications for owners current and financially capable. HAMP … was a failure, so no surprise something like this comes up.

    From the NYT:

    Rates Rising for Modified Loans

    The federal government’s Home Affordable Modification Program, known as HAMP, was designed to keep borrowers from losing their homes to foreclosure. It has resulted in lower monthly mortgage payments for more than a million homeowners.

    But some industry experts are now questioning whether HAMP has only prolonged the inevitable. HAMP modifications are a five-year deal, and after that, the interest rate on the loan, which was typically reduced to as low as 2 percent, begins to gradually adjust upward.

    Given that household incomes have been largely stagnant since the first HAMP modifications were approved in 2009, as the payments on these loans begin rising this year, many homeowners will find that they are once again at risk of default.

    “From the beginning, it was very evident this was going to be a problem,” said Greg McBride, the chief financial analyst for “HAMP was only ever designed to kick the can down the road.”

    Almost 90 percent of the roughly 900,000 homeowners with an active HAMP modification are scheduled for interest-rate increases from 2014 to 2021, according to a January report from the Office of the Special Inspector General for the Troubled Asset Relief Program.

    Most HAMP borrowers received a rate reduction as one step toward lowering their mortgage payment to 31 percent of their gross monthly income. After five years, the reduced rate may rise by up to 1 percent annually to whatever the national average was for a 30-year fixed-rate loan at the time of the modification. The interest rate on some of these loans could rise to as high as 5.4 percent, and monthly payments could soar by as much as $1,724, the report says.

    The median increase would be closer to $200 a month, but even that could be too burdensome for borrowers who couldn’t afford their payments to begin with and whose incomes haven’t changed since, Mr. McBride said. As it is, he added, about one in four HAMP borrowers already has defaulted on the modified terms. “There’s just not enough breathing room in most American household budgets,” to absorb a sizable rise in loan payments, he said.

    More of these homeowners may have enough equity now to refinance, but that would still mean a mortgage with a market-level interest rate.

  3. Michael says:

    Anyone think investor demand is to blame. I would like to see #s on cash deals to see whether that # has gone down. I have held this belief since 2010, that the market would bottom in 2012 or 2013, and follow that with pretty much stagnant gains till 2021. In 2021, I believe you will see the birth of the next big bubble. 2021 should be the start of the same run we saw begin in 2001.

    My reasons are simple for believing this. It all boils down to demographics. The whole reason the last bubble was created, was due to the boomer generation. People throw out all these other reasons, but it comes down to one thing, the boomers (largest part of our population at the time) was in peak earnings or just coming off peak earnings. They had money to blow to upgrade or invest in housing, or basically, they do what normal do when they are late 40s or in the 50s. The reason we hit a major recession is because they are hitting retirement age. They were the biggest spenders and now they have stopped, and instead went into retirement mode where they think they will run out of money, and spend drastically less.

    In 2021, the next big generation will be approaching the house buying cycle of their life. They will start their house buying since they will be in their late 20’s and early 30’s. Everything is a cycle. Demographics drive economies. It’s the entire reason Japan hit that 20 year recession/stagnation, their demographics said so. Instead of the majority of population working and spending, the majority in Japan were retired and not spending. Simple as that.

  4. Michael says:

    Btw, demographics says it’s a great time to buy. Demand for housing, based on demographics, is at its low right now. Demand decade will come in 10 years. So buy now, hold 10 years, and then sell at the next big demand cycle in the 2020’s.

  5. chicagofinance says:

    “Blame it on the snow” Is that a Milli Vanilli song?

  6. Grim says:

    The hardest part of the blog day is coming up with a new blog title, after 8 years worth of posts, that ain’t easy.

    By the way – that is exactly what I was thinking.

  7. Juice Box says:

    re # 3 – “market bottom.”

    More like market top.

    Isn’t the Fed taking away the punch bowl? With the punch bowl goes the wealth effect. 80% of that wealth for the average Joe is housing and stocks.

    QE sent rates down from 3.6% to 1.2% added approximately $10 trillion to the value of housing and stocks. What happens when that is taken away by rising rates?

    We are closer than most people think to a 1929 scenario.

  8. Comrade Nom Deplume, back as Captain Justice says:

    [8] juice,

    Wow, indeed. I wish I was this guy’s civil lawyer. Easy and big payday.

  9. Michael says:

    During the Eisenhower administration, the top tax rate was about 70% and we were building interstate highway systems. Now it’s barely 32% and we can’t even fix bridges.

  10. grim says:

    We’re all too worried about brown smelt and spotted three toed salamanders to actually do anything productive anymore. Besides, nobody wants to see the bridge and it’s too noisy and traffic would be a nightmare and what about that old lead paint, can’t you build it somewhere else? God forbid anyone cut down a tree to build a pipeline or transmission line. Did you see this nonsense in Ridgewood about the toxic telephone poles? Are you f*cking kidding me? How about you get no more power? How about we take them all down? Then what? F*cking idiots, what do you expect – to have PSEG commission Stickley to make them out of quarter sawn oak and re-finsh them with linseed oil every year? If you are so worried, how about instead you teach Graydon and Ellery not to touch the f*cking pole, you can slot that right into your homeschooling curriculum right after the anti-vaccine lecture.

    Oh, by the way, how is your Mandarin coming?

  11. Michael says:

    11- Toxic telephone lines? Now that’s funny!!!

  12. Libturd at home says:

    Wow…you guys beat me to it.

  13. Fast Eddie says:

    grim [11],

    Excellent rant! I’m envious! :) Yes, we will eventually become strangled by so much righteousness that we will not recognize anything that once resembled a great nation. It’s all in the name of acceptance, compassion and inclusiveness.

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  17. joyce says:

    Libtard / Juicebox,

    This is probably my favorite part: “As soon as Prosecutors saw this video, they dismissed all of the charges against Jeter. Interesting to note, an investigation by Bloomfield PD’s scandal plagued internal affairs division had found no wrongdoing by officers.”

    So what’s worse that the prosecutors didn’t bother looking at all the evidence before proceeding … or … that the vaunted Internal Affairs found no wrong-doing? Can we see their finished report (if they even did one)? Can we see who they did and didn’t talk to and what evidence they collected (again, if any)?

  18. joyce says:

    Along with the pig-scum directly involved, can we throw all of IA in jail too? and the chief, too… why not

  19. 30 year realtor says:

    #15 Gary – What do endangered species and NIMBY thinking have to do with acceptance, compassion and inclusiveness?

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  22. anon (the good one) says:

    yep, acceptance, compassion and inclusiveness

    @NationInstitute: A black person is killed by police, security guards or vigilantes every twenty-eight hours #jordandavis

    Fast Eddie says:
    February 23, 2014 at 10:48 am
    grim [11],

    Excellent rant! I’m envious! :) Yes, we will eventually become strangled by so much righteousness that we will not recognize anything that once resembled a great nation. It’s all in the name of acceptance, compassion and inclusiveness.

  23. Fast Eddie says:

    That’s not what I’m talking about. I was referring to EXACTLY the words that grim said in his post. F.ucking geezus!!

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  26. Ben says:

    During the Eisenhower administration, the top tax rate was about 70% and we were building interstate highway systems. Now it’s barely 32% and we can’t even fix bridges.

    No one actually paid 70%. The tax rate has nothing to do with fixing bridges. We even earmarked the stimulus money to fix them all. The problem is, the construction companies that are supposed to do this get a blank check and they don’t bother doing the work. There’s no accountability.

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  28. Happy Renter says:

    [19] My favorite part is the cops screaming: “Why are you trying to take my gun? Stop trying to take my gun! Why are you resisting arrest? Stop resisting arrest!” while the beat the crap out of him for no reason.

    It’s like a bunch of 4th graders, except with badges and guns.

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  31. Hughesrep says:


    Cops by and large were the kids beaten up as fourth graders.

  32. 30 year realtor says:

    #26 Gary – I call bullsiht! Acceptance, compassion and inclusiveness had nothing to do with what Grim wrote. You just clearly feel that the NIMBY people and the people concerned with saving species from extinction are the same people you hate for acceptance, compassion and inclusiveness? Need I explain the leap from there to where you are being accused of going?

    Hard to line up on the other side of acceptance, compassion and inclusiveness. Even if you fee they should be tempered or compromised sometimes, how can these be considered negative goals?

    I’m not out to call you names but if it waddles, quacks, flys and swims it is a duck. If your not a duck, stop quacking.

  33. Juice Box says:

    ‘re: telephone poles. One of my wifes’ s pet peeves was how awful they look. We have buried lines in out development, it adds value too.

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  35. Fabius Maximus says:

    For all you Hockey Fans out there, I have a few of my right wing wingnuts doing this today.

  36. Fabius Maximus says:

    #11 Grim

    Did someone wake up with Pink Eye on their perspective. Lets skip over the fact that you have to close the Pulaski for 5 years after all the years of maintenance neglect.

    With the Ridgewood issue its doesn’t seem to be the issue with the poles themselves, it seems to be the installation. They are not pretreated at the factory and the installers are slapping this stuff on and polluting the soil around.

    I don’t think the issue is Graydon licking the pole is the problem, more like Pixie Fru Fru the Shih Tzu getting liver cancer from drinking the puddles around it. Your Great Danes Kidneys might be able to process this out, smaller dogs not quite as much.

  37. Fast Eddie says:

    30 year,

    I have no idea… I mean no idea what the f.uck you are talking about? What the f.uck is a NIMBY? Did I miss something here?

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  41. Comrade Nom Deplume, Guardian of the Realm says:

    [10] michael,

    Top marginal tax rates of 70-90% were never intended to raise revenue, and I doubt they ever raised very much. They were a de facto cap on executive compensation.

    However, look at the historical trend line of economic development in the US versus the rest of the world and the decline in the top marginal rate and you see a pretty clear correlation: As the rest of the world became competitive, our economy suffered, and marginal rates started coming down. This was done in order to spur investment and job growth in the US, or better said, to keep what we had, or better said still, to stanch the bleeding.

    Now, unless you get the rest of the world to agree to raise its marginal rates and close loopholes first, or you hermetically seal the borders to create the sort of insulated economy we had during Eisenhower, Kennedy and Johnson, I posit that raising marginal rates to those levels will have some unpleasant side effects on our economy.

    At least we won’t have to hear about the Fortune 400 any more. It will be more like the Fortune 4, at least in this country.

    Now you can say that won’t happen; fine, pass the law and see.

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  43. Comrade Nom Deplume, Guardian of the Realm says:

    [40] eddie,

    NIMBY=Not In My Back Yard.

  44. Comrade Nom Deplume, Guardian of the Realm says:

    [38] fabian,

    So what? Sports on ice dominated by canadians. Like that’s news?

    How about Great Moments in the Winter Olympics for Great Britain that Don’t Involve Sliding Rocks?

  45. Comrade Nom Deplume, Guardian of the Realm says:

    [41] juice,

    anon wants all of them prosecuted. Whether for having guns or for refusing to voluntarily redistribute their wealth, I’m not sure.

    What say you anon? Former, latter or both?

  46. Comrade Nom Deplume, Guardian of the Realm says:

    [50] redux,

    One of the comments described Piers as “America’s least-liked Arsenal fan.”

    I take issue with that.

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