 | Existing Home Sales Increased 14.7% in December |
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| Posted Under: Data Watch • Home Sales • Housing |
Implications: Existing home sales soared in December, more than making up for a temporary regulation-related drop in November. The 14.7% surge in December was the largest single-month gain on record, sending sales to a 5.46 million annual rate, well above what the consensus expected. Sales are up 7.7% from a year ago and sales for all of 2015 were the highest since 2006. Back in November, sales plummeted due to a new federal rule called "Know Before You Owe," which changed the documents needed at closing, lengthening the settlement process. As a result, some closings that would normally have happened in November were pushed into December. However, reports suggest the length of the settlement process has yet to go fully back to normal, which means existing home sales should remain healthy in early 2016 (assuming weather isn't a problem). Remarkably, the increase in sales in 2015 happened even though existing home inventories remained slim, down 3.8% from a year ago and the lowest December since 1999. We continue to expect higher home sales in 2016 and think the pace of sales should accelerate, in part, as higher prices lure "on-the-fence" sellers into the market, boosting inventory. The median sales price of an existing home is up 7.6% from a year ago. In other recent news, new claims for jobless benefits rose 10,000 last week to 293,000 while continuing claims declined 56,000 to 2.21 million. Plugging these figures into our models suggests payrolls are growing 195,000 in January, another solid month. On the manufacturing front, the Philadelphia Fed index, a measure of sentiment in East Coast manufacturing, came in at -3.5 in January versus -10.2 in December signaling that the rate of contraction in that sector is flattening out.
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