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Existing Home Sales:  Rebound from Surprise Decline

October 20, 2016

Bottom Line: Existing home sales in September rebounded from surprising weakness in August. Realtors reported that first-time buyers drove sales higher as their activity reached a 4-year high in share at 34%. Home re-sales have averaged 5.38 million over the past 3 months and 5.44 million over the past 6 months, suggesting that the housing market treaded water for most of the summer. Inventories of homes available for sale climbed modestly -- but the trend suggests inventories are still tight. Months supply fell to 4.5, seasonally quite low suggesting the slower winter selling season could see new lows for this metric. On a year-over-year basis, prices are still modestly higher.

Existing Home Sales ROSE by 3.2% in September to 5.47 million, compared with market expectations for an increase to 5.35 million. The prior month was revised down from 5.33 to 5.30 million. Home re-sales are now 0.6% ABOVE their year ago level but are 24.6% BELOW their September 2005 record high.

42.8% of single family homes sold were priced in between 100k to 250k and 32.7% of single family homes sold were priced in between 250k to 500k. Single family home sales are up 3.1% year-over-year for prices in between 100k to 250k and are up 15.1% for prices in between 250k to 500k.

The Inventory of Homes Available for Sale ROSE by 1.5% to 2,040k but are still 6.8% BELOW their year ago level. Because inventories increased while sales increased, the Months Supply FELL to 4.5 months from 4.6 months. This is still well BELOW its July 2010 cyclical peak of 12.4 (which was its highest level since 1982) and even BELOW the 6 month level that is considered 'normal'.

Home Prices ROSE compared to their year ago levels. Average home prices are 4.2% ABOVE their year ago levels while median home prices are 5.6% ABOVE their year ago levels.

Article by Contingent Macro Advisors