The housing market is certainly showing stronger growth with the National Association of Realtors reporting that Existing-home sales have risen to it’s the highest level in 11 years. However, the report noted that Total housing inventory is now 9.7% lower than a year ago ( 1.85 million) and has sequentially declined for thirty consecutive months.
All is not lost though, for those homes that haven’t been sold yet and realized the 11-year price levels, the unsold inventory of homes is reported at a 3.4 month supply level, which is down from 4.0 months ytd.
Moreover, the NAR chief economist, Lawrence Yun had this to say about November home sales.
“Home sales in most of the country expanded at a tremendous clip in November. Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end. As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of the sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”
Additionally, in concurrence with this morning MBA Mortgage Rate increase of 4.6%, Mr. Yun had this to say:
“The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist,” said Yun. “Price appreciation is too fast in a lot of markets right now. The increase in homebuilder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages.”
The Dollar’s reaction to the pro-economic “#acceleration” report – Mr. Keith McCullough
And a little reaction from the S&P 500 there at 10:00am. (Note* I working on my paint and photoshop skills to highlight the market reaction level.Thanks for baring with me errant readers.)
Existing Home Sales
Market Sensitivity: Medium.
What Is It: Measures monthly sales of previously owned single-family homes.
Most Current News Releases on the Internet:
Housing Affordability Index: www.realtor.org/topics/housing-affordability-index
Home Web Address: www.realtor.org
Release Time: 10:00 a.m. (ET); published four to five weeks after the month being reported ends.
Source: National Association of Realtors.
Revisions: Monthly revisions tend to be small. Annual revisions due to seasonal adjustment factors take place in February and can cover the preceding three years.”
Bernard Baumohl. “The Secrets of Economic Indicators”
Reaction to existing home sales is muted unless the economy is edging closer to over-drive and facing an eruption of inflation pressures. Any unexpected jump in existing home sales could easily scare away bond investors, a scenario that will lower bond prices and raise yields.
A sudden plunge in sales might foreshadow a slowdown in economic activity in the months ahead, which would support higher bond prices and lower rates. Thus, to a large extent, the response to this release really depends on the economic backdrop.
From the standpoint of corporate profits, investors prefer to see existing home sales stay at a high level. Housing is a major industry upon which many other businesses rely. A strong report will buoy stock values, whereas a weak report might undermine them. However, if strength in housing fires up inflation, the Federal Reserve will eventually intervene with higher rates, and such a prospect can upset the equity market.
Foreign investors monitor existing home sales because it is one of the dominant indicators of consumer spending and can potentially influence interest rates. Generally, the dollar will remain firm or appreciate as long as existing home sales do not stumble into an extended downswing. A sluggish housing market would lower rates and raise uncertainties about future stock prices, both of which can weaken demand for U.S. currency.