Friday, December 16, 2016

Lawler: Early Look at Existing Home Sales in November

by Bill McBride on 12/16/2016 03:13:00 PM

From housing economist Tom Lawler: Early Look at Existing Home Sales in November

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 5.60 million in November, unchanged from October’s preliminary pace and up 15.2% from last November’s surprisingly low seasonally adjusted pace. Unadjusted sales should show a higher YOY gain, reflecting the higher business-day count this November compared to last November.

If my projection is correct, this November would break a string of “unusually” large monthly changes in November home sales, as shown in the table below.

Monthly % Change in Existing Home Sales (SAAR)
  Nov. 2012Nov. 2013Nov. 2014Nov. 2015**Nov. 2016**
Preliminary5.9%-4.3%-6.1%-10.5%0.0%
First Revision4.8%-5.9%-6.3%-10.5%
Latest* 3.5%-2.4%-4.1%-8.1%
*Changes from "First Revision" to "Latest" reflect seasonal factor revisions
**LEHC estimate

(Some analysts blamed the steep drop in seasonally-adjusted sales last November to the October implementation of the new “TRID” rules in October, which may have delayed some November closings. For November 2013, some analysts attributed the weak sales to the 16-day government shutdown in October of that year. I never saw an explanation for the November 2014 dip in home sales in November, though it was fully captured in my regional tracking.)

On the inventory front, both local realtor/MLS data and data from other listings trackers suggest that existing home listings fell by slightly more than the seasonal norm last month, and that the YOY decline in listings was greater in November than in October. How that will translate into NAR estimates, however, is not clear, as NAR inventory swings over the last few months have not synched up with publicly-available realtor data. For example, the NAR’s inventory estimates showed an unusually large monthly decline in August, followed by a contra-seasonal gain in September and a much smaller than normal decline in October. NAR’s October inventory estimate was above the August estimate -- implying a considerable two-month increase in “seasonally-adjusted” inventories. Realtor/listings data, in contrast, suggested that listings from July to October showed a more “normal” seasonal drop, with YOY declines accelerating from mid-year through October.

My “best guess” is that the NAR’s inventory estimate for November will be about 5.4% below October’s preliminary estimate and 6.4% lower than last November’s estimate.

Finally, local realtor data suggest that median existing SF home sales price in November will be up by about 6.5% from last November.

CR Note: Existing home sales for November will be released on Wednesday, December 21st. The consensus estimate is the NAR will report sales of 5.54 million SAAR.