The Econoday consensus estimate for December existing home sales was 5.75 million units at a seasonally-adjusted annualized rate (SAAR). Instead, home sales fell 3.6% to 5.57 million units in a range of 5.5 million units to 5.9 million units.
Fred data on housing supply is not seasonally-adjusted and only dates to 2014. But 3.2% is a record low going back 19 years.
The NAR revised November sales from 5.81 million units to 5.678 million units so the decline was a bit bigger than reported.
Lack of supply pulled down existing home sales in December and may very well pull down sales in January as well. Existing home sales fell 3.6 percent in December to an annualized rate of 5.570 million which is near the low end of Econoday’s consensus. But November, despite a small downward revision to a 5.780 million rate, remains by far the best month of the expansion, with the 5.700 million rate in March last year the next strongest.
Supply in December’s market fell a very steep 11.4 percent in the month to 1.480 million homes. On a sales basis, supply fell from 3.5 months in November to 3.2 months which is a record low in 19 years of available data. Lack of choice is an increasing problem for the resale market.
Prices softened slightly which won’t be drawing new homes onto the market. The median slipped 0.2 percent in the month to $246,800 for a year-on-year increase of 5.8 percent.
This year-on-year price rate is well above the 1.1 percent gain in overall sales which points perhaps to future price concessions and even less supply. On the year, supply is down a very sizable 10.3 percent.
The split between single-family and condo sales shows weakness for the latter, with sales down 11.6 percent on the month to a 610,000 annualized rate. Single-family sales fell a monthly 2.6 percent to 4.960 million.
Housing data are usually volatile which should take the surprise out of December’s weakness. Still, resales remain solid though the lack of supply is a serious obstacle for future sales.
Hurricane Impact
The surge in November was likely a hurricane-related artifact and may not be matched for a long time. Sellers want more than they can get so they pull houses off the market as buyers struggle with affordability.
Mike “Mish” Shedlock
“Another factor is the insane home owner tax in the North-east and California.” Homeowner tax? Yes, bc home OWNERS are the only ones who pay real estate taxes. lol
Record low supply + lower prices = Record low demand. Something the NAR will never report.
Millennials buying RVs, not houses: link to cnbc.com
Demographics in the U.S. will impact demand due to baby boomers downsizing. Another factor is the insane home owner tax in the North-east and California.
Need a “Cash for Clunkers” program for housing — “Largesse for Listing?” “Subsidy for Selling?” California is floating an expansion of its program that allows sellers to carry their existing property tax rate with them to a new house in a different county. Of course, there would be winners and loser as with any government program. The problem is how to increase velocity. Or maybe there is no problem at all?
SPX closed up 2. I think that counts as a down day.
Doesn’t help matters that even when you can sell, you are just looking to trade to another artificially inflated piece of property. It’s a sea of moral hazard/central bank liquidity.