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Friday, January 18, 2013

Lawler: Early Look At Existing Home Sales in December

by Calculated Risk on 1/18/2013 06:49:00 PM

From economist Tom Lawler:

Based on reports from various realtor associations/MLS across the country, I expect that existing home sales in December as measured by the National Association of Realtors will come in at a seasonally adjusted annual rate of 4.97 million in December, down 1.4% from November’s pace (which I think should be revised upward a bit), but up 13.5% from last December’s seasonally adjusted pace. Folks who track unadjusted data from local realtor reports but don’t take into account “calendar” effects would probably expect a lower number; after all, most (though not all) local realtor reports showed substantially lower YOY growth in December compared to November, and the number of local areas showing YOY sales declines was up in December compared to November. Indeed, national existing homes sales on an unadjusted basis, which showed YOY growth of 15.5% in November, are likely to show a YOY growth rate of less than half that amount in December. However, not only was there one fewer “business” day this December compared to last December, but both Christmas and New Years (this year) came on a Tuesday --- reducing the “effective” number of business days even further. As a result, this December’s seasonal factor will “gross up” the unadjusted sales figures by more than last Decembers.

On the inventory front, both local realtor reports and entities that track local real estate listings showed that in most (though not all) areas of the country the number of homes listed for sale at the end of December was down sharply from the end of the November – which is typical for most (though not quite all) parts of the country. Based on looking at various sources of data, my “best guess” is that the NAR’s estimate of the inventory of existing homes for sale at the end of December will be 1.87 million, down 7.9% from November and down 19.4% from last December.

Finally, local realtor/MLS data suggest that the NAR’s estimate of the median existing SF home sales price in December will show another double-digit YOY increase, probably of around 11.0%. This gain does not, of course, reflect the increase in “typical” home prices, but does reflect in part the sharply lower foreclosure sales share of home resales this December compared to last December.

CR Note: The NAR will report December existing home sales on Tuesday, Jan 22nd. The consensus is the NAR will report sales of 5.10 million.

Based on Lawler's estimates, the NAR will report inventory around 1.87 million units for December, and months-of-supply around 4.5 months (down from 4.8 months in November). This would be the lowest level of inventory in over 10 years, and the lowest months-of-supply since early 2005.