Implications: The housing market is getting better. Existing home sales grew strongly in December, increasing 12.3% after increasing 6.1% in November. Since July, the pace of existing home sales has increased 38%. Sales of existing homes are now only about 5 percent below the long-term trend of a 5.5 million annual pace. Note that this gain is without artificial government support. We think the recovery in sales will be sustained despite the possibility of higher mortgage rates. With housing affordability at its highest level in at least 40 years, buyers becoming more secure about the state of the economy, private-sector job creation accelerating, and buyers more confident that their homes will rise in value rather than decline, the future of the housing market looks promising. In other news this morning, new claims for unemployment insurance declined 37,000 last week to 404,000. The four-week moving average is now 412,000, the lowest since July 2008. Continuing claims for regular state benefits fell 26,000 to 3.86 million, the lowest level since October 2008.
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