Tuesday, December 15, 2015

Lawler: Early Read on Existing Home Sales in November: Big Drop

by Bill McBride on 12/15/2015 03:48:00 PM

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.97 million in November, down 7.3% from October’s preliminary estimate and up just 0.4% from last November’s seasonally adjusted pace. Compared to last November unadjusted sales were either flat or down in quite a few (though by no means all) markets across the country, which seems surprising since last November’s sales face fell well below expectations. Overall I estimate that unadjusted existing home sales last month were up by about 2.4% from last November’s pace. (There was one more business day this November compared to last November, so the YOY % change in seasonally adjusted sales should be lower than that for unadjusted sales).

It was not directly clear what led to the sharp slide in seasonally adjusted national home sales last month. Some realtor groups suggested that the October implementation of the new “TRID” rule in early October may have delayed home closings last month, though others suggested that probably this factor wasn’t a “big deal.” And while in a few markets – notably Houston and a few others with exposure to the oil industry – sharp declines in home sales reflected a weakening housing market – that wasn’t apparent in most markets.

It is slightly interesting to note that the monthly % change in existing home sales for each of the last four November’s has been unusually large, as shown in the table below.

Monthly % Change in Existing Home Sales (SAAR)
  Nov. 2012Nov. 2013Nov. 2014Nov. 2015**
Preliminary5.9%-4.3%-6.1%-7.3%
First Revision4.8%-5.9%-6.3% 
Latest* 3.5%-4.0%-4.1% 
*includes seasonal factor revisions, done once a year
**LEHC estimate

On the inventory front, my “best guess” is that the NAR’s estimate of the inventory of existing homes for sale at the end of November will be 1.99 million, down 7.0% from October and down 4.3% from a year earlier. In many markets inventories are down much more sharply from a year earlier, though Houston – with listings up by more than 20% from a year ago – is a big exception.

Finally, local realtor/MLS data suggests that the national US median existing SF home sales price last month was up by about 5.9% from last November.