US: Existing Home Sales


February 21, 2018 10:00 EST

Consensus Consensus Range Actual Previous Revised
Existing Home Sales - Level - SAAR 5.650M 5.480M to 5.700M 5.380M 5.570M 5.560M
Existing Home Sales - M/M Change -3.2% -3.6%
Existing Home Sales - Yr/Yr Change -4.8% 1.1%

Highlights
An uptick in supply and lower prices failed to boost existing home sales in January, which unexpectedly fell 3.2 percent versus the marginally downward revised December level to an annualized rate of 5.380 million, well below the consensus estimate of 5.650 million and the lowest rate for January since 1999. Year-on-year, home resales were down 4.8 percent, the largest decline since August 2014.

Though lack of supply continued to hamper sales volumes, supply in January's market increased 4.1 percent from December's level to 1.520 million homes. While this is down 9.5 percent from January last year, inventory rose from December's 3.2 months, a 19-year low, to 3.4 months. Still, lack of choice remains a serious problem for the resale market.

But prices softened considerably in January, which won't be drawing new homes onto the market. The median selling price fell by a sharp 2.4 percent to $240,500 for a year-on-year increase of 5.8 percent.

Sales were down compared to December in all four regions of the country, with declines most pronounced in the Midwest, down 6.0 percent, and the West, down 5.0 percent.

While existing home sales tend to be volatile, the softness in today's report may cast some doubt on housing strength indicated by last week's report of a surge in permits to the best level of the expansion.


Market Consensus Before Announcement
Existing home sales have been choppy but did finish 2017 on the uptrend. But the number of homes for sale are at a19-year low which should limit January's sales results. Against December's 5.570 million annualized rate, a 5.650 million rate is January's consensus.

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.