And February’s poor showing lifted total housing inventory by 3.5% to 3.49 million existing homes available for sale, which represents an 8.6-month supply at the current sales pace, up from a 7.5-month supply in January.
The NAR’s chief economist Lawrence Yun pointed out that sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers.
Yun added, “This tug and pull is causing a gradual but uneven recovery.”
Rough weather in January and February may have also played a minor role, delaying showings and pushing sales into March, but we’ll need to look at the data next month in order to verify if this is the case.
Nonetheless, the very high level of affordability and the improving economy have yet to spark much of an interest in the housing market.
Further, we are seeing an expanding and a quickening in the economic recovery without any fuel being provided by the housing market – an unusual occurrence since housing typically leads.
Likely reason: as sales of new and existing homes have subsided over the last five years, housing has played a much smaller role in the overall economy, and weakness in the industry is not having near the impact it once had.
But a firm recovery in housing would provide an overall boost to GDP, and absent a big improvement in job creation, housing seems likely to muddle along in a slow and uneven recovery for much of the year.
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