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Existing Home Sales: 6th Straight Miss

October 19, 2018

Bottom Line: Affordability continued to hamper existing home sales in September. Sales missed expectations for the sixth straight month as mortgage rates moved to higher, nearing the highest levels of the last decade . Home re-sales have averaged 5.27 million over the past 3 months, and 5.34 million over the past 6 months, sharply below the pace 5.54 million pace of 2017. Inventories of homes available for sale dropped modestly; but the trend in months’ supply rose slightly. On a year-over-year basis, prices are still modestly higher. The trend in home sales is now clearly lower. That said, the degree of weakness in September suggests some potential for a rebound in October due to normal and weather-related volatility.

Existing Home Sales FELL by 3.4% in September to 5.15 million, compared with market expectations for a decline to 5.29 million. The prior month was revised down from 5.34 to 5.33 million.

Home re-sales are now 4.1% BELOW their year ago level and are 29.0% BELOW their September 2005 record high.

The Inventory of Homes Available for Sale FELL by 1.6% to 1,880k but are still 1.1% ABOVE their year ago level. Because inventories declined while sales declined, the Months Supply ROSE to 4.4 months from 4.3 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 2.5% ABOVE their year ago levels while median home prices are 4.2% ABOVE their year ago levels.

Article by Contingent Macro Advisors