Friday, November 18, 2016

Lawler: Early Read on Existing Home Sales in October

by Bill McBride on 11/18/2016 05:01:00 AM

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports from across the country released through today, I project that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.47 million in October, unchanged from September’s preliminary pace and up 3.4% from last October’s seasonally adjusted pace. I project that unadjusted sales last month were virtually unchanged from last October, with the difference between the YOY growth in adjusted vs. unadjusted sales reflecting calendar effects (one fewer business day, and one fewer Friday, this October compared to last October. Hurricane Matthew negatively impacted hone closings in some southeastern coastal markets, but the impact on the national sales numbers was fairly modest.

On the inventory front, local realtor/MLS data, as well as data compiled by realtor.com, suggest that the inventory of existing homes for sale in October fell by more on the month than last October. How that translates into the NAR’s estimate for October is not clear, however, because the NAR’s September inventory estimate looked too high relative either to local realtor/MLS reports or to realtor/com data. For September the NAR estimated that the inventory of existing homes for sale showed a “contra-seasonal” increase of 1.5% from August (NAR seasonal factors show a “typical” monthly drop in September of about 3.9%), and a 6.8% YOY decline. Realtor.com data, in contrast, showed a monthly drop of 1.7%, and a YOY decline of 9.4%. It should be noted that the NAR inventory numbers are estimates for the end of the month, while realtor.com numbers reflect average listings during the month. If anything, however, end of month numbers would be expected to show even bigger monthly declines that average listings in September (given the trend in listings at that time of the year).

If I had to “guess,” I’d guess that the NAR’s inventory estimate for October will be about 4.9% lower than September’s preliminary estimate (which should be revised downward), and 8.1% lower than a year ago.

Finally, local realtor/MLS data suggest that the NAR’s estimate of the median existing SF home sales price in October should be up about 7.0% from last October.

CR Note: The NAR is scheduled to release October existing home sales on Tuesday, November 22nd. The consensus is for 5.44 million SAAR in October.