U.S. housing likely to be a drag on Q1 2018, to contribute positively to economy in 2018

Contract signings in the U.S. rose 3 percent in February, which almost reversed a 3.2 percent decline in January. Single-family sales were the sole reason for the rise in February. Sales had increased in the South and West. Pending home sales, which are measured at the tie of signing ad tend to lead existing sales measured at closing, rose in February for the first month since November.

Continued extreme weather in March might hold back some activity this spring, especially in the Northeast and Midwest. According to a Wells Fargo in a research report, housing is likely to be a drag on first quarter GDP but to add positively to the economy in 2018 as a whole. The underlying strength in the economy and income growth should counter headwinds facing homebuyers this year. A tight supply of homes for sale and rising interest rates are expected to carry on challenging affordability in many markets, added Wells Fargo.

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