January’s drop in US housing sales is nothing to worry about
US home sales dropped 5.1 per cent to 4.62m in January. Forecasts had been for a fall, although to a more encouraging 4.68m, following December’s 4.87m.
Annualised, they fell to a 462,000 rate, the National Association of Realtors said.
Weakness in housing activity has been put down, almost wholly, to the unseasonably bad weather the US has been seeing.
And higher mortgage rates, brought about by tapering, are also having an effect on the housing market.
But Paul Ashworth and Paul Dales, both economists at Capital Economics, think that the “lost activity” will most likely be recouped over the next few months – recent numbers aren't something to be bothered by.
While higher mortgage rates have clearly taken some steam out of the housing recovery, they won’t extinguish it altogether.
Once the weather returns to seasonal norms, residential investment will resume adding to overall GDP growth.