Implications:  Driven by strong demand from first-time buyers, sales of existing homes rebounded strongly in September, reversing the slump that began back in July.  Sales of previously owned homes rose 3.2% in September to a 5.47 million annual rate and are now up 0.6% from a year ago. The share of first-time buyers was a big contributor to this month's gain, rising to the highest level since 2012. As demographics shift, and millennials age, this group will continue to be a source of strength in the future.  However, it's important to remember housing is volatile from month to month. That being said, we think the broader trend will continue to be upward, although there are still some headwinds.  Tight supply and rising prices continue to hold back sales.  Inventories have now fallen for sixteen consecutive months on a year-over-year basis.  Further, the months' supply of existing homes – how long it would take to sell the current inventory at the most recent selling pace – is only 4.5 months.  According to the National Association of Realtors® (NAR), anything less than 5.0 months is considered tight supply.  The good news is that demand was so strong that 44% of properties in September sold in less than a month, pointing to further interest from buyers in the months ahead.  However, this higher demand has also driven up median prices, with September marking the 55th consecutive month of year-over-year gains.  While this may temporarily price some lower-end buyers out of the market, it should ultimately help alleviate some of the supply constraints as "on the fence" sellers take advantage of higher prices and trade-up or trade-down to a new home, bringing more existing properties onto the market as well.   In other news this morning, new claims for unemployment insurance rose 13,000 last week to 260,000, the 85th week in a row below 300,000.  Continuing claims increased 7,000 to 2.057 million.  Plugging these figures into our models suggests payrolls are growing close to 200,000 in October.  On the manufacturing front, the Philadelphia Fed index, which measures factory sentiment in that region, came in at 9.7 for October, a decline from 12.8 in September but still positive and signaling continued growth.

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