Is it Cold Feet or Just the Weather?

With the opening of the 2015 home selling season just a few weeks away, are sellers showing signs of getting cold feet?  Do many plan to sit out 2015 or are they just moving slowly because their toes are still numb from the latest winter wallop and all will be well with the first daffodils?

Fannie Mae’s monthly National Housing Survey, taken last month but released yesterday, picked up some gloomy trends.  After rising al fall, the percentage of the public that believes that prices will continued to rise fell three points and those who think they will stay the same rose by the same amount.  Expectations that mortgage rates would rise again increased by three points and price change expectations were flat.  Most telling, those who say it is a good time to buy a house remained constant at 67 percent, while those who say it is a good time to sell decreased by 4 percentage points to 40 percent, lower than it’s been since November.

Is this a sign of serious seller reluctance or just mid-winter blues?  Other polls show confidence about the economy is up and people are feeling a bit more secure in their jobs.   In fact, consumers have been bullish on home prices for most of 2014 and it’s hard to understand what might be causing the sudden change of heart-a change that comes at a most inopportune time, when markets are building their inventories for spring buyers.

Realtor.com, which is a good gauge of MLS inventories across most of the nation, was down 8.1 percent in January from a year ago.  So were other markets including Washington and Baltimore which today reported big jumps in new listings.   Last year was not great but it was much better than 2013.  In those two markets, which released their February data today, the listings rolled in during Fenbruary.  DC’s active listing count shot up 16.6 percent over 2014.  Baltimore was up 10.8 percent over last year.

Redfin is been sounding the alarms about low inventories, which may in part be due to the West Cost bias of its database. It reports bidding wars in Oakland and tight inventories in San Francisco. In January, it said there was less than three months’ worth of homes on the market in Boulder (2.4 months), Denver (2 months) and Seattle (2.6 months). In Dallas, inventory fell to a 3.3-month supply from 3.6 months a year earlier. These are January data and may reflect a particularly active December in many of those markets, not the behavior of sellers listing for the spring market.

NAR raised no eyebrows with its January existing sales report.  It reported a total housing inventory at the end of January up 0.5 percent from December  to 1.87 million existing homes available for sale, some 0.5 percent lower than a year ago (1.88 million). Unsold inventory is at a 4.7-month supply at the current sales pace – up from 4.4 months in December.

This is the month that sellers make their decisions and act.  Inventories around the nation seem to be in better shape today than they were a month ago, or a year ago.  But it’s too soon to relax.  let’s not forget 2013 when sellers did not step up to the plate.  The results were West Coast bubbles and double digit sticker shock that sent first-time buyers back to their apartments.