The new-home market continues to go like gangbusters. Purchase applications for new homes soared 35% in January compared to December. This bodes well for the outlook. We expect to see a strong rebound in new-homes sales for January after a disappointing December.

Existing homes are another story. Sales continue to languish. If we look at the trend in purchase applications, we see few signs of improvement. The purchase index was down 2.0% in the February 7 week. This points to continued weakness for existing-home sales, which dominate the overall market.

Most of us are familiar with the inventory issues that plague existing-home sales. This is somewhat confounding when you consider that home prices across the country continue to improve. The latest data from FNC show its Residential Price Index closed 2013 on an up note, with property values improving 8.7% year-over-year. Rising prices should have drawn in more supply than they have.

This suggests to us that sluggish GDP and job growth are impacting the existing-home market more than the new-home market. This makes sense when you consider younger and first-time buyers are more active in the existing-home market.

Once again, higher economic growth is what's needed. Unfortunately, it still refuses to materialize.

Courtesy of Jessica Regan.

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