News

Home sales hit a nine-month low, a leading economic report said housing is “faltering” and Fed Chairwoman Janet Yellen told Congress the housing market is “depressed.” Wow. What’s going on?
Relax. It’s not as bad as it sounds.
At first blush, it’s tough to put a positive spin on January home sales, which fell nearly 5 percent from December, according to the National Association of Realtors. More people are putting their houses on the market, but there are still fewer homes for sale than there were a year ago. But here’s the good news: Sales are better than last year and they have been for four straight months.
Prices are still going up, too. A much-watched price index from S&P/Case-Shiller recorded a 4.6 percent price gain in December from a year earlier. So why did David Blitzer, the guy in charge of the index, say the housing recovery is “faltering”? He was talking largely about construction and new home sales. Both are weak, and that’s bad for the overall economy. But Case-Shiller, the Realtors and others show, residential real estate writ large continues to gain ground slowly.
When Yellen called the housing market “depressed”, she too was talking mostly about construction. While new homes account for less than 10 percent of the market, economists like to talk about them because they create lots of jobs and have a big impact on GDP. On the plus side for homebuyers and sellers, Yellen made it pretty clear the Fed wasn’t in a hurry to raise interest rates.
Tomorrow, Redfin will release updated data showing more good news. We saw a 49 percent jump over last January in the number of would-be buyers wanting to tour properties.  The number of homes newly listed for sale rose, too: 6.3 percent from a year ago. That’s important — if there aren’t enough homes for sale, prices rise too fast and homes get too expensive for most people. That’s what’s been happening for the past year or so.
It’s not all rosy. Wages are still stagnant, mortgages can still be difficult to come by and affordability continues to be a big issue. But don’t be alarmed by this week’s headlines.