Wednesday, January 24, 2018

A Few Comments on December Existing Home Sales

by Bill McBride on 1/24/2018 11:24:00 AM

Earlier: NAR: "Existing-Home Sales Fade in December; 2017 Sales Up 1.1 Percent"

A few key points:

1) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus.  See: Lawler: Early Read on Existing Home Sales in December. The consensus was for sales of 5.75 million SAAR in December.  Lawler estimated 5.66 million, and the NAR reported 5.57 million.

"Based on publicly-available state and local realtor/MLS reports from across the country released through today, I predict that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.66 million in December, down 2.6% from November’s preliminary pace"
2) Inventory is still very low and falling year-over-year (down 10.3% year-over-year in December). More inventory would probably mean smaller price increases, and less inventory somewhat larger price increases.    This was the 31st consecutive month with a year-over-year decline in inventory.

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Existing Home Sales NSAClick on graph for larger image.

Sales NSA in December (427,000, red column) were below sales in December 2016 (437,000, NSA) and also below sales in December 2015 (436,000, NSA).

This is the lowest sales NSA since December 2014.

Sales NSA will be lower through February.

We will probably have to wait until March - at the earliest - to draw any conclusions about the impact of the new tax law on home sales.