Buying conditions for durable goods saw the steepest drop, falling 19%, largely driven by concerns over potential tariff-induced price increases. Expectations for personal finances and the short-term economic outlook each slipped nearly 10%, while the long-term outlook declined by 6%, hitting its lowest point since November 2023.
Inflation expectations added to the downbeat mood, with year-ahead inflation rising to 4.3%, up from 3.3% in January. Long-run expectations also climbed from 3.2% to 3.5%, the largest monthly increase since May 2021. The inflation outlook’s deterioration was widespread, impacting most demographics and political groups.
Existing-Home Sales Slide in January
The U.S. housing market presented a mixed picture in January. Existing-home sales fell 4.9% from December to an annualized rate of 4.08 million units, as per NAR data. However, sales rose 2.0% year-over-year, marking the fourth consecutive month of annual growth.
Housing inventory increased by 3.5% month-over-month to 1.18 million units, providing a 3.5-month supply at the current sales pace. The median home price reached $396,900, up 4.8% from a year earlier, extending a 19-month streak of price gains.
Regional Variations Highlight Uneven Market
Sales declines were observed in most U.S. regions, with the West experiencing the largest drop of 7.4%. The South fell 6.2%, and the Northeast saw a 5.7% decline, while the Midwest remained stable. Despite mixed sales, home prices increased across all regions, led by a 9.5% surge in the Northeast.
Mortgage rates remain elevated, averaging 6.85% for a 30-year fixed-rate mortgage as of February 20, only slightly down from last week’s 6.87%. High mortgage rates combined with rising prices continue to challenge housing affordability.
