US: Existing Home Sales


Wed Apr 20 09:00:00 CDT 2016

Consensus Consensus Range Actual Previous Revised
Existing Home Sales - Level - SAAR 5.268M 5.190M to 5.400M 5.330M 5.080M 5.070M
Existing Home Sales - M/M Change 5.1% -7.1% -7.3%
Existing Home Sales - Yr/Yr Change 1.5% 2.2%

Highlights
Existing home sales rose more than expected in March, up 5.1 percent to a 5.330 million annualized rate that, however, fails to reverse a downwardly revised 7.3 percent drop in February. And the year-on-year rate, at only 1.5 percent, is decidedly weak. But looking at the first quarter as a whole, which is important for housing data given their volatility, existing home sales are up a much more respectable 4.8 percent.

March's gain is led by the most important component, single-family homes where the rate rose 5.5 percent in the month to 4.760 million. Year-on-year, single-family homes are up 2.6 percent. The showing for condos is less convincing, up only 1.8 percent in the month for a year-on-year decline of 6.6 percent.

Prices in this report are up, a monthly 5.0 percent for the median for a year-on-year rate of plus 5.7 percent which closely tracks rates in FHFA and Case-Shiller data. The median price for an existing home is $222,700 which, outside of last year's Spring selling season when the median peaked above $230,000, is the best of the recovery.

Higher prices help pull in more homes into the market, at 1.980 million in March for a sharp 5.9 percent gain from February. Yet year-on-year, supply is still weak, down 1.5 percent. Looking at supply relative to sales, supply is at 4.5 months which is up slightly from 4.4 months in February and down slightly from 4.6 months in March last year.

Regional data are very positive with all four regions showing monthly gains led by the Northeast at an 11.1 percent surge. The Northeast also leads the year-on-year rates at plus 7.7 percent with the West bringing up rear at a 2.5 percent decline.

Realtors are generally upbeat right now and the housing market, though not on fire with weakness still appearing on the new home side, could be poised for a solid Spring season, one that would contribute to a needed pickup in the pace of the overall economy.

Market Consensus Before Announcement
A 3.7 percent March surge is expected for existing home sales which however plunged 7.1 percent in a February drop that the usually upbeat National Association of Realtors underscored as meaningful. The strength of the jobs market has yet to be reflected in home sales, the result in part of low wage growth. Low supply and only marginal price appreciation have long been negatives in this report.

Definition
Existing home sales tally the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends. (National Association of Realtors)



Description
This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Even though home resales don't always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer.

Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic "ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home resales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.