Forecasts for Existing and New Home Sales (January 2019)

• Zillow expects January existing home sales to rise 0.9 percent from December to 5.04 million units at a seasonally adjusted annual rate (SAAR). That’s down 6.4 percent from January 2018.
• We estimate new home sales totaled 643,000 units (SAAR) in January, up 1.6 percent from a year earlier.

Existing home sales posted an exceptionally weak December – registering their slowest pace in more than three years. But December marked a recent high point for economic pessimism: Mortgage rates were coming off seven-year highs, the stock market sank deep into correction territory, a partial federal government shutdown loomed, and the Federal Reserve seemed poised to push interest rates higher.

Somewhere between Christmas and New Year’s, however, everything changed.

The shutdown plunged forward – taking a measurable toll on economic sentiment and data for much of January – but the Fed paused, rates dipped, and financial markets rallied. Potential home buyers who had sat on the sidelines during the Q4 turbulence saw for-sale inventory rising and, once interest rates dipped, the buyers again began to (tentatively) bite.

We expect existing home sales posted a modest rebound in January despite headwinds associated with the partial government shutdown, rising 0.9 percent from December to 5.04 million units at a seasonally adjusted annual rate (SAAR). They remain down 6.4 percent from a year earlier.

The National Association of Realtors (NAR) will report January existing home sales on Thursday, February 21.

The outlook for new home sales is somewhat cloudier, because December new home sales data still have not been released as a result of the partial government shutdown. (The Census Bureau reported November new home sales a month late, on January 31,and plans to release December new home sales on Thursday, February 26. They have yet to announce a release date for January new home sales.)

We expect new home sales fell 2.1 percent in December to 643,000 units (SAAR) – up 1.6 percent from a year earlier – and then rose 0.6 percent in January to 647,000 units (also SAAR).