Existing Home Sales Unexpectedly Tumble In November

With homebuilder sentiment at 20 year highs, but mortgage applications stumbling, today’s first glimpse at November US home sales data will be the tie-breaker on how the housing market is doing.

And the news is not good – existing home sales fell 1.7% MoM (worse than the 0.4% decline expected) and are up just 2.7% YoY (despite a huge decline in mortgage rates YoY).

Source: Bloomberg

In October, existing homes were the only cohort that saw sales increase (New- and Pending-sales dipped), but that is gone now and November saw sales fade…

Source: Bloomberg

The median sales price rose 5.4% from a year earlier to $271,300 – the highest November price on record – and the number of homes available in November fell 7.3% from a year earlier to 1.64 million, a record low for the month, NAR’s data showed.

“America is facing a housing shortage and affordability challenges,” though demand remains solid, Jessica Lautz, the NAR’s vice president of demographics, said at a briefing in Washington.

“More inventory is needed at the lower end and price reductions may be needed at the higher end.”

Sales last month declined in the South, the nation’s largest region, to an annualized 2.24 million pace, the slowest since the start of the year; purchases also declined in the West.

The question is – with The Fed now “on hold”, and the world convinced growth/inflation has troughed in the cycle, what happens to home sales if rates start to rise?

Source: Bloomberg

Get back to work Mr.Powell.