 | Existing Home Sales Dropped 10.5% in November |
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| Posted Under: Data Watch • Home Sales • Housing |
Implications: Existing home sales came in much lower than expected in November, with the number of sales well lower than even the most pessimistic forecast. Sales of previously owned homes fell to a 4.76 million annual rate in November, a 10.5% decline, and are now down 3.8% from a year ago. However, the decline was due to a change in regulations, not market forces. According to the National Association of Realtors (NAR), a new federal rule called "Know Before You Owe" altered the documents needed at closing and pushed into December many closings that would normally have happened in November. In fact, 47% of realtors surveyed by the NAR reported longer timeframes to close in November compared to a year ago. As a result, expect a sharp rebound in December closings before they return to trend early in 2016. However, another factor that continues to hold down sales is a lack of supply. Existing homes for sale are down 1.9% from a year ago, leaving buyers with few choices and explaining rising prices, with median sales prices up 6.3% from a year ago. Moving forward, higher prices should lure "on-the-fence" sellers into the market, boosting inventory, and increasing sales in the year ahead. In other housing news this morning, the FHFA Index, which measures prices for homes financed by conforming mortgages, increased 0.5% in October and is up 6.1% from a year ago. That's an acceleration from the 4.7% gain in the year ending in October 2014. In the past twelve months, price gains have been the fastest in the "Mountain" region, which includes Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, and New Mexico. Price gains have been the slowest in New England. On the manufacturing front, the Richmond Fed index, a measure of mid-Atlantic factory sentiment, rose to +6 in December from -3 in November. That's the first positive reading since July and signals that manufacturing may finally be moving beyond problems related to slow growth abroad, a strong dollar, and lower energy production.
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