Monday, February 20, 2012

Lawler: Update on Expectations for Existing Home Sales Report

by Bill McBride on 2/20/2012 08:16:00 PM

While we wait for news from Europe, here is an update from economist Tom Lawler:

Several of the home sales reports I’ve seen since early last Friday showed materially stronger YOY growth than I had expected, especially in a number of Midwest markets. As a result, I have upped my estimate for January existing home sales as measured by the National Association of Realtors. Right now my regional tracking suggests that the NAR will report that existing home sales ran at a seasonally adjusted annual rate of about 4.76 million, up about 3.3% from December’s pace, and up about 2.6% from last January’s pace. Note that January is seasonally the weakest month of the year in terms of closed home sales. (The weakest month for contracts signed from a seasonal perspective is December).

On the inventory front, it is pretty clear that existing home listings fell again nationally last month, though various “trackers” differ on how much. In addition, the NAR’s reported monthly inventory drop of 9.2 in December was significantly larger than listings data seemed to suggest. My “best guess” is that the NAR will report a monthly inventory drop of about 2.2%, which would be a YOY drop of 20.0%. While most realtor groups/associations reported a decline in active listings from December to January, there were several that reported increases.

CR Note: This sales rate, combined with a decline in inventory, could put months-of-supply under 6 months for the first time since early 2006. Some of the decline is seasonal (inventory is always low in January and months-of-supply uses NSA inventory numbers). The NAR is scheduled to report existing home sales on Wednesday.