There were two important reports on the U.S. economy released this morning. First, data from the National Association of Realtors (NAR) showed that total existing home sales in America, which account for a much larger portion of the overall U.S. housing market than new home sales (due out tomorrow), rose by 2.0 percent in October to a seasonally adjusted annual rate of 5.60 million units. That was much better than economists had expected and the September gain was revised higher. Moreover, October's sales pace was 5.9 percent above this same period last year and surpassed June's pace as the highest since February 2007 (pre-recession). Regionally, home sales in October rose everywhere last month, with the largest gains being found in the South (+2.8 percent) and the Midwest (+2.3 percent). Total housing inventory fell by 0.5 percent to 2.02 million existing homes available for sale in October, and months’ supply slid to 4.3 at the current sales pace. The median selling price was $232,00 in October, a 6.0 percent gain compared to this same period last year and therefore the 56th consecutive month of annual growth. The upward trend in home prices has started to weigh on sales over the past year, especially among first-time homebuyers. This problem may become worse in the months ahead as mortgage rates have spiked since the election in anticipation of the greater inflation pressures that could result from the incoming administration’s expected pro-growth policies. NAR chief economist Lawrence Yun added that “In the short-term, some prospective buyers may rush to lock in their rate and buy now, while others — especially those in higher-priced markets — may be forced to delay as a larger monthly payment outstretches their budget.”
Elsewhere, a report from the Federal Reserve Bank of Richmond showed that manufacturing activity in the Mid-Atlantic region of the country rebounded this month, with the composite index rising from -4.0 to +4.0 in November. That was the third monthly improvement in a row for the headline index and the first positive (expansionary) reading since July. Under the hood, new order volumes, capacity utilization, total employment, and hours worked all improved in November but measures of shipments, order backlogs, and wages deteriorated. Surveyed managers’ expectations for capital expenditures and general activity six months from now improved but outlooks on total employment and worker compensation moderated. Overall this was an encouraging report but incoming data from several other regions have been less encouraging, suggesting that there is still no clear end in sight to the “industrial recession” in America.
Sources: Econoday, Bloomberg, Twitter, ZH, NAR, FRBR, FRBSLPost author: Charles Couch