 | Existing Home Sales Rose 4.2% in May to an Annual Rate of 5.18 Million Units |
|
| Posted Under: Data Watch • Home Sales • Housing |
Implications: The housing recovery continues to pick up steam. Existing home sales rose 4.2% in May, reaching the fastest pace since November 2009, when sales were artificially boosted by an $8,000 homebuyer tax credit. Sales are now up 12.9% from a year ago and look to have renewed an upward push. The months' supply of existing homes (how long it would take to sell the entire inventory at the current selling rate) declined to 5.1 in May, but this was completely due to a faster selling pace. Inventories rose 7,000 and have now increased for four months in a row. We don't see this as a problem and it may be a sign of strength. More sellers are coming back into the market as pricing power recovers and a greater inventory may facilitate sales as potential buyers are more likely to find what they're looking for. Just a year ago, the months' supply was 6.5; it was 9.1 two years ago. So a supply of 5.1 months is still relatively low. On the pricing front, median prices for existing homes were up a whopping 15.4% from a year ago. This can be attributed to a few factors. First, relatively low inventories while demand is picking up. Second, fewer distressed sales. Third, more sales of larger homes. Sales of homes priced from $0-$100,000 are down 9.3% from a year ago, while $1,000,000+ homes are up 36.9%. In general, it still remains tougher than normal to buy a home. Despite record low mortgage rates, home buyers face very tight credit conditions. Tight credit conditions would also explain why all-cash transactions accounted for 33% of purchases in May versus a traditional share of about 10%. Those with cash are able to take advantage of home prices that are extremely low relative to fundamentals (such as rents and replacement costs); for them, it's a great time to buy. In other news this morning, new claims for unemployment insurance rose 18,000 last week to 354,000. The four-week moving average is 348,000. Continuing claims declined 40,000 to 2.95 million. Plugging these figures into our payroll models suggest a June gain of 179,000 nonfarm and 184,000 private. On the manufacturing front, the Philly Fed index, a measure of activity in that region, rose to +12.5 in June from -5.2 in May, the best reading in more than two years.
Click here for a PDF version
|
|