Sharp divergence in new and existing home sales

A fall in existing home sales in January, to a three year low, suggests that the housing market slowdown that began in 2018 continued into 2019. Indeed, even after a decline in mortgage interest rates, mortgage applications for home purchase dropped back in February. But, helped by a healthier inventory of homes on the market, new home sales rose for the second month in a row in December. That rise in sales has given a boost to homebuilder confidence, and single-family housing starts surged in January. Multifamily starts also increased, supported by low rental vacancy rates. The economic slowdown will weigh on housing market activity over the next couple of years, and both house price and rental growth are set to slow gradually.