November Existing Home Sales, Housing Starts

It’s Alive! …Barely, Housing Takes a Small Step Out of the Basement

  • Existing Home Sales for November increased by 4.0 percent, up to a 4.42 million unit sales rate.
  • The Median Sales Prices for an existing home was down 3.5 percent in November from a year ago.
  • A data revision from National Association of Realtors shows weaker existing home sales since 2007.
  • Housing Starts for November increased by 9.3 percent to a 685,000 annual rate.
  • Permits for New Residential Construction increased by 5.7 percent to a 681,000 unit annual rate.

Residential real estate markets are looking a little better as both construction of new homes and sales of existing homes ticked up in November.  Improving consumer confidence and gradually tightening labor markets look like they are helping to build a foundation under housing. Of course the firmest support to the foundation would be improving sales prices and that has not happened yet.  Prices still look soft for most market areas, sagging under the weight of bloated inventories of distressed homes for sale. Barring a severe downdraft from Europe and/or Asia, U.S. economic conditions will be supportive of firmer house prices through the second half of 2012. So we remain the better part of a year away from the end of the long national nightmare in housing. Existing home sales for November increased by 4.0 percent, up to a 4.42 million unit sales pace, the strongest sales rate since January 2011. For the month, median sales prices increased slightly, but the monthly price comparisons are volatile. Over the past year the median sales price of an existing home is down 3.5 percent. The National Association of Realtors has reworked its historical data to show an even deeper slump in housing through the Recession of 2008/09. However, the previous pattern of the last four years remains largely intact and a gradual upward trend in existing home sales since mid-2010 is visible to the optimist. As if too much good news in housing simply will not do, mortgage applications for purchase look a little soft through mid-December, suggesting that existing home sales for December will fall off the November pace.

Residential construction numbers for November were better than expected. Total housing starts gained a solid 9.3 percent to hit a 685,000 unit pace. Starts were juiced by strong multifamily construction. Declining vacancy rates for multifamily housing are a motivating force for builders. Also, multifamily construction numbers are somewhat volatile, so a give back in December is to be expected. Permits for new construction increased by 5.7 percent to a 681,000 unit rate, the strongest monthly permits number since March 2010.

Market Reaction: Equity markets opened with losses after yesterday’s strong gains. Treasury yields are up. Oil is up to $98.25/barrel. The dollar is up against the yen and the euro.

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