Seems the latest excuse for every economic metric declining is due to the weather. GDP adjusted from 3.2% to 2.4%, Consumer Semtiment falling below 80 for the first time in months, and now home sales.
In February, according to the NAR, some 4.6 million annualized existing homes were recorded, in line with expectations, and a 0.4% decline from the 4.62 million print in January. This was the 19th monthly drop in a row, the lowest since July 2012, and a 7.1% drop year over year.
Lawrence Yun, NAR chief economist, said conditions in February were largely unchanged from January. “We had ongoing unusual weather disruptions across much of the country last month, with the continuing frictions of constrained inventory, restrictive mortgage lending standards and housing affordability less favorable than a year ago,” he said. “Some transactions are simply being delayed, so there should be some improvement in the months ahead. With an expected pickup in job creation, home sales should trend up modestly over the course of the year.”
With spring here and the last remnants of winter disappearing in the coming weeks the moment of truth is near. How much of the slowdown in home sales is due to weather and how much is due to a stagnant economy?
It was my opinion when the Federal Reserve changed leadership and based upon Fed comments that interest rates would be the driving force in home sales this year. After all, the Fed told us their brilliant plan to print trillions of dollars to create jobs while holding interest rates near zero would end when unemployment reached 6.5%.
It seems the Fed understands the 6.7% unemployment rate is bogus and has now switched direction. Fed Chair Janet Yellen announced last week that interest rates would not be raised for six months following the end of the QE experiment at year's end.
That should mean interest rates will remain low until mid 2015, unless bond vigilantes cause volatility in the bond market, which Yellen is powerless to control.
So the driver of home sales will again be job creation. That's not good news when the Obama administrations plan to create jobs is to increase the cost of labor for employers by raising the minimum wage and to fight 'income inequality' which Obama policies have exacerbated.
One needs look no further than a city on the shores of Lake Michigan, which is the home to America's socialist incubator. Then look no further than DC to see the results of the Chicago transplant's policies.
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