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Existing Home Sales:  Growth Reaccelerates Following Volatility

November 22, 2016

Bottom Line: Existing home sales rose in October to their highest level since February, 2007. We've seen three notable trends in existing home sales this year - tight inventories, a return of first-time home buyers driving nearly a third of activity but still modest volumes. Activity in October accelerated as first-time buyers continued to drive sales, pushing prices higher with some anecdotal reports from realtors that many first-time buyers are taking advantage of FHA (government) mortgages. Supply remained tight - Inventories of homes available for sale dropped slightly and months’ supply declined slightly. Median prices are now up 6% on the year.

Existing Home Sales ROSE by 2.0% in October to 5.60 million, compared with market expectations for a decrease to 5.44 million. The prior month was revised up from 5.47 to 5.49 million. Home re-sales are now 5.9% ABOVE their year ago level but are 22.8% BELOW their September 2005 record high.

42.9% of single family homes sold were priced in between 100k to 250k and 31.6% of single family homes sold were priced in between 250k to 500k. Single family home sales are down 0.5% year-over-year for prices in between 100k to 250k and are up 11.5% for prices in between 250k to 500k.

The Inventory of Homes Available for Sale FELL by 0.5% to 2,020k and are now 4.3% BELOW their year ago level. Because inventories declined while sales increased, the Months Supply FELL to 4.3 months from 4.4 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 4.4% ABOVE their year ago levels while median home prices are 6.0% ABOVE their year ago levels.

Article by Contingent Macro Advisors