The housing market has held up remarkably well, but rising mortgage rates and a limited inventory of existing homes are likely to test its resiliency over the coming months. Reports this week on new and existing home sales will provide a snapshot of the market’s performance in February. The latest reading on business investment, which has been gradually rebounding from a slump, rounds out a light menu of economic news.
Existing home sales increased a healthy 3.3% in January despite just a 3.6-month supply of units, lowest since January 2005. Still, the thin stockpile is taking some toll on sales and probably more than offset unusually warm weather in February, says Nomura economist Lewis Alexander. Mortgage rates actually dipped last month but, at about 4.17%, were still up from 3.47% in October. Alexander notes that mortgage applications declined in February while pending home sales, an indicator of future transactions, were down the previous month. All told, economists estimate the National Association of Realtors will announce Wednesday that existing home sales fell 1.8% last month to a seasonally adjusted annual rate of 5.6 million.
Paul Davidson | USA Today