Implications: Existing home sales came in weaker than expected in October, but remained at healthy pace despite buyers having limited options in the existing home market. Sales of previously owned homes fell to a 5.36 million annual rate in October, a 3.4% decline, but are still up 3.9% from a year ago. We do not expect this month's slowdown to become a new normal. Housing data are volatile from month to month and we expect the previous positive trend to reassert itself next month. All-cash sales are down 7.7% from a year ago while sales that require a mortgage are up 8.1% over the same period. The gain in mortgage-financed sales suggests a long-overdue thaw in lending. What's interesting is that the percentage of buyers using mortgage credit has increased as the Federal Reserve tapered and then ended QE. Those predicting a housing crash without more QE were completely wrong. The major factor that held back growth in today's report was supply, or lack thereof. Total housing inventory fell 2.3% in October and is now down 4.5% from a year ago. This is leaving buyers with fewer choices and also helps explain rising prices, with median sales prices up 5.8% 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 recent news, new claims for jobless benefits fell 5,000 last week to 271,000 while continuing claims declined slightly to 2.18 million, illustrating the continued improvement in the US labor market. This positive news was echoed by the Philadelphia Fed index, a measure of sentiment in East Coast manufacturing, which jumped back to +1.9 in November from -4.5 in October signaling expansion. All signs point to continued Plow Horse growth.
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Posted on Monday, November 23, 2015 @ 11:33 AM
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