Existing home sales fell 2.8 percent in December to a 5.49 million-unit rate, which was below consensus estimates. Single-family and condos/condominiums were weak on the month. Inventories remain lean.
Inventories Slip to Lowest Level on Record
- Following three straight monthly gains, existing home sales slipped during the month. On a regional basis, activity in the South was flat, while sales tumbled in all other regions. That said, the three-month moving average shows activity was unchanged from the previous month, showing more volatility than trend. Lean inventories continue to be an issue for resale activity, with homes available down 10.8 percent in December.
Is Housing Finance Reverting to Pre-Election Trend?
- Prior to the election, the 30-year fixed mortgage rate averaged 3.5 percent in 2016, and purchase applications were trending lower. In November, applications jumped as borrowers rushed to lock-in rates. It appears election euphoria is dissipating as the mortgage rate is now more than 20 bps lower than the December spike and the spread between mortgage rates and the 10-year Treasury yield is narrowing along with a drop in applications.