• Zillow expects existing home sales to decrease 2.1 percent in December from November, falling to 5.69 million units at a seasonally adjusted annual rate (SAAR).
• New home sales should fall 12.4 percent after an extremely strong November, to 642,000 units (SAAR).

After an exceptionally strong November with existing home sales beating the consensus expectation by 5 percent and new home sales beating the consensus forecast by 13 percent, we expect that the housing market faced greater headwinds in December. The protracted holiday season – the span from the last workday before Christmas to January 2 extended more than two weeks – offset any rush to buy early in the month as people anticipated more limited homeownership deductions following tax reform.

Overall, we expect existing home sales fell 2.1 percent to 5.69 million units from November at a seasonally adjusted annual rate (SAAR), but are still 3.6 percent above their year-earlier level despite a steady decline in for-sale inventory. The National Association of Realtors (NAR) will report existing home sales on Wednesday, January 24th.

We expect new home sales – which the U.S. Census Bureau will report on Thursday, January 25th – to drop 12.4 percent to 642,000 units (SAAR) after a surprisingly strong November. November sales surged to 733,000 units (SAAR), their fastest pace since July 2007. Even with the slowdown from November, our forecast would still put new home sales up nearly 20 percent year-over-year.