A top economist says the recent government shutdown didn’t appear to impact home sales. Another shutdown, however, may well be bad news for the industry
The government shutdown doesn’t seem to have harmed home sales – but another shutdown could have an impact, according to the National Association of Realtors’ chief economist.
Pending home sales declined nationally in December, but sales in the West experienced a slight increase for the second straight month. The NAR Pending Home Sales Index dropped 2.2 percent to 99 in December, down from 101.2 in November. Contract signings fell 9.8% year over year, marking the 12th straight month of annual decreases.
Although sales were down nationally, Lawrence Yun, NAR chief economist, attributed the drop to market conditions that didn’t involve the shutdown.
“The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December,” he said.
Yun said that so far, there has been no obvious damage to the housing market attributable to the shutdown.
“Seventy-five percent of realtors reported that they haven’t yet felt the impact of the government closure,” he said. “However, it another government shutdown takes place, it will lead to fewer homes sold.”
Yun said that with the government open again, mortgage deals that ground to a halt during the shutdown can resume.
“Some home transactions were delayed, but we now expect those sales to go forward,” he said.
Yun expressed confidence in the housing market for 2019 despite the slow December.
“The longer-term growth potential is high,” he said. “The Federal Reserve announced a change in its stance on monetary policy. Rather than four rate hikes, there will likely be only one increase or even no increase at all. This has already spurred a noticeable fall in the 30-year fixed rate for mortgages. as a result, the forecast for home transactions has greatly improved.”
The Federal Reserve announced Wednesday that it was holding rates steady for now and would exercise “patience” in deciding on future rate hikes.