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Existing Home Sales: Months' Supply Hits 15-year Low

January 24, 2017

Bottom Line: Existing home sales fell more than expected in December but there were upward revisions to November data that nearly offset the miss. Low inventories remain an important theme in existing home sales -- inventories fell 10% in December, pushing months' supply to just 3.6 months, the lowest level in 15 years. Home re-sales have averaged 5.57 million over the past 3 months and 5.48 million over the past 6 months, suggesting that the housing market is still improving. The median sales price finished 2016 at 232k, up 4% on the year.

Existing Home Sales FELL by 2.8% in December to 5.49 million, compared with market expectations for a decline to 5.52 million. The prior month was revised up from 5.61 to 5.65 million. Home re-sales are now 0.7% ABOVE their year ago level but are 24.3% BELOW their September 2005 record high.

42.8% of single family homes sold were priced in between 100k to 250k and 32.1% of single family homes sold were priced in between 250k to 500k. Single family home sales are up 2.3% year-over-year for prices in between 100k to 250k and are up 10.3% for prices in between 250k to 500k.

The Inventory of Homes Available for Sale FELL by 10.8% to 1,650k and are now 6.3% BELOW their year ago level. Because inventories declined while sales declined, the Months Supply FELL to 3.6 months from 3.9 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 3.0% ABOVE their year ago levels while median home prices are 4.0% ABOVE their year ago levels.

Article by Contingent Macro Advisors