February Home Sales 2018… The Fed Made Headlines

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February Existing Home Sales rose 3 percent from January to an annual rate of 5.54 million, above the 5.42 million expected, the National Association of REALTORS® (NAR) reported. Gains were seen in the South and West with declines in the Northeast and Midwest. Sales were up 1.1 percent from a year ago. Unsold inventory is at a 3.4-month supply, well below the 6-month supply that is seen as normal.

Sales of new homes had the opposite result in February, falling for the third straight month. New Home Sales edged lower by 0.6 percent from January to an annualized rate of 618,000, just below expectations, the Commerce Department reported. Sales increases were seen in the Northeast and South, with declines in the Midwest and West. New Home Sales were up 0.5 percent from February 2017 to February 2018. And there was good news regarding inventory. There was a 5.9-month supply of new homes for sale on the market, which is near the 6-month supply seen as normal.

The Fed also made headlines in the latest week. As expected, the Fed raised its benchmark Federal Funds Rate 0.25 percent, bringing the new target rate range to between 1.5 and 1.75 percent. The Fed acknowledged inflation remains low, but it is expected to rise in the coming months as tax cuts further stimulate the economy.

If inflation does begin to rise, an increase in home loan rates could follow. Inflation reduces the value of fixed investments like Mortgage Bonds, and home loan rates are tied to Mortgage Bonds. However, many factors impact the direction of the markets, including possible tariffs, trade wars and the direction of other economic reports. I’ll continue to monitor all of these developments closely. Thanks, Jeff Tarbel!

In the meantime, home loan rates remain historically attractive.

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About The Author
Bruce Champion

From Seattle Washington and leaving to see the world at age 18, I traveled through Europe. I lived and stayed in Italia for 4 years. Fascinated by aviation, I obtained my Pilot's license in 1984. I went to work for American Airlines shortly afterward, where I continued my adventures for 25 more years. Landing in Lake Tahoe's Squaw Valley U.S.A in the mid 80's, I lived 13 more years, getting into Real Estate investments which led me to acquiring my R.E broker's license. I am now with Gateway Sotheby's International Realty covering the Sierra Foothills from Auburn to Sutter Creek.