It was an unusual year for our housing markets to be sure. The year began with virtually every market our company serves experiencing sales decreases in single family home sales versus the first quarter the prior year, a notable trend considering it had been several years since we observed a similar phenomenon. Yet the year painted a more positive picture by the time it reached its conclusion. Many of our markets climbed ahead of 2017 by year’s end, while others trailed only slightly behind. When declines occurred, they were modest. Our Westchester and Fairfield County markets saw modest decreases in unit sales and dollar volume, while the Connecticut Shoreline saw minimal decreases in unit sales even as dollar volume improved. Litchfield and Berkshire Counties experienced sales growth and the Farmington Valley was flat with steady sales.
There was much speculation in the media throughout the year on the reason for reduced sales levels in certain markets. We often heard that tax reform was the culprit, and while we acknowledge that uncertainty surrounding the tax bill may have played a role, we maintained the position all year long that it was too early to draw conclusions. It’s only this year that we may begin to understand the full effect, if any. We will continue to follow this factor closely, but for now, observable economic data continues to support a healthy outlook for real estate.
One interesting recent development is the drop in mortgage rates, which are averaging about 4.51% for 30-year fixed mortgages, down from the highest rates in over seven years reached last fall at almost 5%. According to an article in The Wall Street Journal on January 7, the current rate reduction may be spurring some buyers into the market who see an opportunity. Other economic indicators provide further reason for optimism. The Labor Department jobs report in January pointed to strong job growth with a still low unemployment rate of 3.9%, while Federal Reserve interest rates remain at historic lows despite incremental increases. The stock market has demonstrated some volatility, and the GDP is projected to come in a little lower in the fourth quarter than the prior two at around 2.8%, a slower but still good pace. Yet consumer confidence is still soaring at incredible heights, with the Conference Board Consumer Confidence Index reporting consistently elevated levels every month of the year. In December, consumer confidence stood at 128.1 (1985=100). When consumer confidence is this healthy, we typically see demand in the real estate buyer pool follow suit.