US Existing Home Sales Unexpectedly Limp Higher In Nov, Off Record Lows

Despite homebuilder sentiment ticking up (along with their stock prices) and housing starts soaring – buoyed by a 100bps decline from multi-decade highs in mortgage rates – analysts expected a small 0.4% MoM decline in existing home sales in November (after October’s big drop).

Instead, existing home sales beat expectations by rising 0.8% MoM in November, which pulled the YoY decline up to just 7.28%…

Source: Bloomberg

“The latest weakness in existing home sales still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high before the actual closings in November,” said NAR Chief Economist Lawrence Yun. “A marked turn can be expected as mortgage rates have plunged in recent weeks.”

The total existing home sale SAAR bounced very marginally off record lows…

Source: Bloomberg

Regional sales were mixed:

Existing-home sales in the Northeast slipped 2.1% from October to an annual rate of 470,000 in November, down 13.0% from November 2022. The median price in the Northeast was $428,600, up 4.8% from the prior year.

In the Midwest, existing-home sales rose 1.1% from the previous month to an annual rate of 940,000 in November, down 8.7% from one year ago. The median price in the Midwest was $280,800, up 4.9% from November 2022.

Existing-home sales in the South improved 4.7% from October to an annual rate of 1.77 million in November, a decline of 4.3% from the prior year. The median price in the South was $351,500, up 3.4% from last year.

In the West, existing-home sales slumped 7.2% from a month ago to an annual rate of 640,000 in November, down 8.6% from one year before. The median price in the West was $603,200, up 5.3% from November 2022.

Mortgage rates are down, but leave a long way for home sale to drop still…

Source: Bloomberg

But, the gap between current rates and effective rates for Americans is still immense…

Source: Bloomberg

The median existing-home price for all housing types in November was $387,600, an increase of 4.0% from November 2022 ($372,700), but down MoM…

In terms of price buckets, the high-end continues to see substantial volume growth, while houses priced below $500K continue to drop. Perhaps that’s because there just aren’t many houses that are priced below $500K any more.

Additionally, the NAR reported that all four U.S. regions posted price increases.

“Home prices keep marching higher,” Yun added.

“Only a dramatic rise in supply will dampen price appreciation.”

Indeed, inventory levels remain a problem as shown below…

… and between record low inventories, and housing starts accelerating in the latest data, coupled with Powell’s massive pivot, has The Fed re-ignited its 3rd housing bubble of the 21st century?