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Existing Home Sales: December Rebound

January 22, 2020

Bottom Line: Existing home sales rose sharply more than expected in December as housing supply tightened even further. Inventory of both single-family and coops and condos fell sharply, bringing month's supply down to a 20-year record low of just 3 months. Prices rose and were modestly higher on a year-on-year basis. On a trend basis, home re-sales have averaged 5.44 million over the past three and six months, above the 5.34 million pace of the last 12 months and notably higher than the 5.0 million pace of 2018. Overall, this suggests housing continues to rebound moderately after 2018's sharp adjustment to tax policy and higher interest rates.

Existing Home Sales ROSE by 3.6% in December to 5.54 million, compared with market expectations for an increase to 5.43 million. There were no revisions to prior data.

Home re-sales are now 10.8% ABOVE their year ago level but are 23.6% BELOW their September 2005 record high.

The Inventory of Homes Available for Sale FELL by 14.6% to 1,400k and are now 8.5% BELOW their year ago level. Because inventories declined while sales increased, the Months Supply FELL to 3.0 months from 3.7 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 5.9% ABOVE their year ago levels while median home prices are 7.8% ABOVE their year ago levels.

Article by Contingent Macro Advisors