Implications: The big headline on existing homes is that sales were revised down 14 percent for the past few years because the National Association of Realtors made mistakes that apparently resulted in double counting. These revisions were well publicized, so it is strange that so many forecasters (but not First Trust) ignored this and continued to predict more than 5 million sales. So, while sales fell about 12 percent below consensus, the data also show that sales were up 4% in November and 12% from a year ago. Meanwhile the inventory of homes is down 18% versus last year and at the lowest level since 2005. This resulted in a 7 months' supply of unsold homes, the lowest since 2009. The healing in the housing market is further along than previously thought. The pessimistic narrative you may hear elsewhere about how bad today's report was and how ugly the revisions were is simply not true. Reported existing home sales never fell by as much as new home sales or home building the last few years. So, today's revisions fix the problem caused by over counting. In addition, existing home sales only measure a shift in assets from a buyer to a seller. They do not count as current production and will have no impact on our GDP forecast. As the inventory of existing homes continues to be whittled down, we expect a steady recovery in the housing market.
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