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Registered Investment Adviser Caleb Lawrence

The major averages continue to demonstrate that nothing matters entering the final hour with modest gains despite some meaningful disappointing data. In addition to the first shot in a potential trade war the data this week on real estate has been a real disappointment. With starts, existing homes sales and now new home sales all missing materially.

Economically significant new home sales fell 9.3% in December to 625,000 units annualized, so much for the expected tax law change inspired jump. All regions declined only the Northeast avoided falling hard. Month’s supply hit 5.7, the median price increased .7% to $334,400. For all of 2017 sales advanced a respectable 14.1%. With the tax law changes having material impacts in high priced coastal markets, like California, with limits of mortgage interest deduction for HELOCS and such. Given materially higher mortgage rates of late real estate could stumble as 2018 gets underway.

The Kansas City Fed regional index gained 2 points in January to 16, price pressures increased significantly for the month on what is an otherwise unremarkable report.

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