Existing Home Sales Rose Almost 15% in December
US Housing Rebounds while Manufacturing Remains Negative
US existing home sales jumped 14.7% to 5.5 million in December
Led by the increase in the South and the West, existing home sales recorded a rise in all major regions in December. According to the National Association of Realtors, existing home sales rose by 14.7% to 5.5 million in December. This was well above the consensus estimate of 5.2 million. Existing home sales have shown a strong rebound, considering the 10.5% drop seen in November.
ITB rises with improved existing home sales data
Existing home sales have risen by 7.7% over the past year. With the increase in sales data, the iShares U.S. Home Construction ETF (ITB) rose by 2.9% on January 22. Among residential construction stocks, D.R. Horton (DHI), NVR (NVR), PulteGroup (PHM), and Lennar Corporation (LEN) rose by 4.0%, 1.3%, 3.8%, and 2.5%, respectively, on January 22.
Total housing inventory fell by 12.3%
The total housing inventory fell by 12.3% to 1.8 million existing homes available for sale in December. The unsold inventory came in at a 3.9-month supply at the current sales pace, as compared to a 5.1-month supply in November.
The share of first-time homebuyers increased to 32.0% in December as against 30.0% in November. Although first-time homebuyers were at a lower level, they gained some traction in December.
In December, distressed sales—foreclosures and short sales—declined to 8%, as compared to 11% in the previous year and 9% in the previous month.
Home prices are moderating, and mortgage rates have remained low. Given the existing home sales, we may see a jump moving forward. More and more potential homebuyers may be attracted to the housing sector with better job prospects and growing confidence in the economy.
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