What I Saw Last Week
U.S. Existing Home Sales increased 2.0% month-over-month in October to a seasonally adjusted annual rate of 5.48M units (I had forecast an increase to 5.42M units) versus a downwardly revised 5.37M (from 5.39M) in September. The October sales pace is the strongest since June; however, it is still 0.9% below the level seen a year ago.
The median existing home price for all housing types increased 5.5% to $247,000, which was the 68th straight month of year-over-year gains. The median existing single-family home price was measured at $248,300, up 5.4% from a year ago.
The inventory of homes for sale at the end of October (1.80M units) dropped 3.8% and is 10.4% lower than the same period a year ago. It is notable that the inventory of existing homes for sale has fallen year-over-year for 29 consecutive months.
Unsold inventory is at a 3.9-month supply at the current sales pace, versus 4.4 months a year ago and well below the 6.0-month supply typically associated with a more balanced market.
First-time buyers were 32% of sales in October, up from 29% in September but down from 33% a year ago, while all-cash sales were 20% of transactions, unchanged from September but down from 22% a year ago.
My takeaway from the report is that notable supply constraints remain, which will continue to act as a drag on overall sales due to the limited inventory and the high prices on available inventory that is crimping affordability.
The final Consumer Sentiment number for November was revised to 98.5 from the early month figure of 97.8 – my call was for it to rise to 97.9.
The upward revision was a byproduct of an upward adjustment in the reading for the expectations index which rose from 87.6 to 88.9.
The takeaway from the report is that consumers are feeling more confident in their expectations for income, employment, and inflation, which could bode well for future spending activity.
What to Watch for This Week
U.S. New Home Sales in September were measured at an annual pace of 667,000. The October figure should come in a little stronger with the annual rate up to 680,000.
The 20-City Case Shiller Index rose by 5.9% year -over-year through August and the September number is likely to show prices up by 6%.
Consumer Confidence in October came in at 125.9 – its highest reading since December 2000 – and the November number will likely be a little softer. Look for a figure of around 124.0.
The second estimate for U.S. GDP in the third quarter should show the national economy expanding by 3.2%, up from the initial figure of 3%.
The NAR Pending Home Sales Index for October will show slight improvement with the index higher by 0.6%.
Income & Spending rose by 0.4% and 1.0% respectively in September and the October figures will show both incomes and spending higher by 0.3%.
U. S. Construction Spending rose by 0.3% in September and the October figure should show further expansion of 0.5%.