 | Existing Home Sales Rose 1.7% in August to a 5.48 Million Annual Rate |
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| Posted Under: Data Watch • Home Sales • Housing |
Implications: Despite all the fear-mongers saying higher mortgage rates would kill the housing recovery, today we got our second look at sales that would be affected by higher rates, and boy were they wrong, again! Existing home sales were up 1.7% in August, up a very strong 13.2% versus a year ago, and hit the highest level since February 2007. It sure doesn't look like higher rates are having any negative effects and there are a few reasons for this. First, higher rates reflect expectations of faster economic growth. Second, with home prices rising and expected to keep rising, buyers are more willing to buy than back when rates were lower but buyers thought home prices might fall further. The months' supply of existing homes (how long it would take to sell the entire inventory at the current selling rate) dropped to 4.9 in August. Inventories have now grown over the past seven months, but we don't see this as a problem. More sellers are coming back into the market as pricing power recovers. In turn, as greater inventory hits the market, it will facilitate even more sales as potential buyers are more likely to find what they're looking for. This is exactly what we are seeing as inventory gains are not keeping up with home sales (hence a lower months' supply). The months' supply is down substantially from one and two years ago, when it was 6.0 and 8.2, respectively. On the pricing front, median prices for existing homes were up a very robust 14.7% from a year ago. In other news, new claims for unemployment insurance rose 15,000 to 309,000. The four-week moving average is 314,750. Continuing claims declined 28,000 to 2.79 million. On the manufacturing front, the Philly Fed index, a measure of activity in that region, rose to +22.3 in September from +9.3 in August, the best reading in more than two years.
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