Good report for existing home sales as we saw the pace pick up from our low levels during the summer months. November saw a 4.68 million annual rate, just shy of estimates, but still a marked improvement from the 4.43M we saw in October. Inventories of unsold homes stand at 9.5 months worth.
From the Release: “Existing-home sales got back on an upward path in November, resuming a growth trend since bottoming in July, according to the National Association of Realtors®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 5.6 percent to a seasonally adjusted annual rate of 4.68 million in November from 4.43 million in October, but are 27.9 percent below the cyclical peak of 6.49 million in November 2009, which was the initial deadline for the first-time buyer tax credit.
Lawrence Yun, NAR chief economist, is hopeful for 2011. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” he said.
Yun added that home buyers are responding to improved affordability conditions. “The relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970,” he said. “Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.”
In a second report, we had a surprise jump in housing prices during October. Rising prices will help rebuild households balance sheets and restore wealth. However, we see that in September prices fell by 1.2%, a larger drop than previously reported. With today’s existing home sales data, I think we can say it was a decent day for US housing market news. That should be USD supportive.
From the Release: “U.S. house prices rose 0.7 percent on a seasonally adjusted basis from September to October, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.7 percent decrease in September was revised downward to a 1.2 percent decrease. For the 12 months ending in October, U.S. prices fell 3.4 percent. The U.S. index is 14.5 percent below its April 2007 peak.”
Combined with our GDP report earlier in the day, it should be overall supportive of the US recovery story. If housing prices show some life, and home buyers react favorably to good affordability conditions and what will hopefully be an improving labor market, then perhaps even housing won’t be as a big drag on the economy as it has been.