WASHINGTON, Feb 22 (Reuters): Severe cold weather and a shortage of houses on the market pushed US home resales to an 18-month low in January, the latest indication economic activity has hit a soft patch.
The National Association of Realtors said on Friday that home sales dropped 5.1 per cent last month to an annual rate of 4.62 million units, the lowest level since July 2012.
The Realtors group said unseasonably cold weather was partly to blame, but it also acknowledged some fundamental weakness, with fewer homes on the market to choose from and higher mortgage rates and prices reducing affordability.
"Some housing activity will be delayed until spring," said Lawrence Yun, NAR chief economist. "At the same time, we cannot ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates."
The 30-year fixed mortgage rate is about a full per centage point higher than it was a year ago, even though rates have come down a bit since hitting a two-year high in September.
Sales tumbled in the Northeast, South and Midwest, which were hit by snow storms and ice last month. But they were down 7.3 per cent in the West, an indication that other factors apart from the weather also weighed on sales.
Home resales, which peaked in July, have declined in five of the last six months, and in January were down 5.1 per cent from a year-ago.
Economists had expected sales to fall to a 4.68-million pace last month and some were not convinced that the weather had played a major role in the January slump.
"The weakness in existing home sales has been going on for some time now and needs to be acknowledged, particularly by the Federal Reserve," said Diane Swonk, chief economist at Mesirow Financial in Chicago.
