Editorial|&utm_term=|Website-Editorial-NAT(Website)|"> Auction.com LLC. The firm's January Real Estate Nowcast projects that existing home sales for the month will fall between seasonally adjusted annual rates of 4.9 and 5.21 million annual sales, with a targeted number of 5.06 million. This suggests that January sales will be up from one year ago and essentially flat compared to December sales.

According to Rick Sharga, EVP of Auction.com, “There's nothing pointing toward a quantum leap in January home sales. Demand continues to be tepid, reflected by the relatively weak search activity that we're tracking in Google Trends data. And inventory levels of available homes continue to fall, which means that even if demand picks up, there might not be enough homes to meet it.”

As GlobeSt.com reported in December 2014, following November's weak home sales figures, Sharga said, “In a month where consensus forecasts were all too optimistic, we are reminded that the housing market is recovering in fits and starts, and there remain significant headwinds. Multiple factors may have contributed to November's weaker-than-expected results, including a drop in inventory, declining investor activity, a sharp sales decline in the West, possible reflecting affordability issues, and unexpectedly harsh weather conditions at the end of the month in the Midwest and Northeast.”

On January 23^rd, the National Association of Realtors released its existing home-sales data for December, reporting that home sales increased to 5.04 million units following November's unexpectedly weak performance. One month prior, the Auction.com Nowcast predicted that existing home sales for December would be 4.98 million, providing the market with an accurate picture of December sales activity well in advance of publicly available sales data. According to the latest Nowcast, the housing market is likely to level out this month, rather than repeat December's impressive month-on-month improvement.

Auction.com's chief economist Peter Muoio says, “The existing home-sales pace of the past several months shows that housing has shaken off the weakness it experienced in 2013 and early 2014. But difficult mortgage conditions, stagnant wages and lingering wariness about homeownership benefits have kept annual sales right around 5 million units, where they have been for the past few years.”

Muoio also cited potential fallout from weaker economies in the oil-producing states, particularly Texas, as a concern for the housing market in 2015. “White-hot sales growth in Texas has well outpaced US existing home sales growth over the past three years, pushing the Texas share of US existing home sales up to a near-record 6.2%. Low oil [prices] will cool the Texas economy and likely with it home sales within the state, exerting a drag on US sales in 2015.”

Sharga tells GlobeSt.com, “There isn't likely to be a big increase in demand from homebuyers anytime soon. Most indications are that 2015 will be essentially flat when compared to 2014. Lower oil prices may eventually provide enough economic stimulus to encourage more home buying; but that's likely to be offset by significant slowing in Texas, which has had some of the strongest home sales numbers in the country over the past few years, and a handful of other oil and energy-dependent states.”

Sharga adds that Millennials are starting to find jobs, but will need time to pay down student debt and build up savings for a down payment. “Millions of borrowers remain underwater or in a neutral equity position and need time to build up equity (this has an effect on both supply and demand). Boomers can't sell their homes (impacting inventory) because their adult children are living with them; this has delayed the long-anticipated Boomer down-sizing (impacting demand). And when interest rates eventually go up, we'll be faced with a new problem: rate lock, where borrowers have limited incentive to trade in a 3.5% mortgage for a higher cost loan.”

Sharga also says it's much more likely that we'll continue to see a slow, incremental recovery at least through 2016 as underlying economic conditions improve. “But the good news is that when you start with a base of 5.5 million existing and new home buyers, incremental improvement can add up pretty significantly over time.”