New home sales shook off earlier weather effects to post a strong gain in January. Although existing home sales fell again, they should also recover before too long. Nevertheless, the bigger picture is that the recent weakness of housing market demand, alongside an increase in the inventory of homes for sale, has driven a noticeable loosening in supply conditions. The months’ supply of unsold stock stood at 5.4 in January, an increase from 4.7 six months earlier. On past form, that looks consistent with year-on-year house price gains slipping back from 12%-13% at present to around 8% by mid-year.
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