U.S. February Michigan CSI revised lower as inflation expectations rise, January Existing Home Sales fall
A 4.9% rise in January existing home sales is consistent with recent gains in housing activity fading as Fed easing expectations fade, but weather may have also played a part. Revised February Michigan CSI data shows 5-10 year inflation expectations picking up significantly, now at 3.5% from a preliminary 3.3% breaking what had been a stable trend near 3.0%.
The Michigan CSI inflation expectations data needs to be treated cautiously due to extreme divergences in opinion between Democrats and Republicans, but the direction of the overall data is notable. The short term 1-year view was unrevised at 4.3% but this is well above January’s 3.3%.
Higher inflation expectations appear to be weighing on overall sentiment, which was revised lower to 64.7 from 67.8, with both current conditions and expectations revised lower. Since the election future expectations of Republicans have risen to 106.6 from 61.4 while those of Democrats have fallen 36.8 from 93.1, showing that the influence of political bias on the data is massive.
January’s existing home sales drop is consistent with a dip in December pending home sales but survey evidence for January sales from the NAHB held up, before slipping in February. January sales fell in three of the four regions, the exception being unchanged sales in the Midwest.
Prices are also showing signs of losing momentum, the median down 1.7% on the month with yr/yr growth slowing to 4.8% from December’s 5.8% pace which was the strongest since October 2022.
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