(-) Existing home sales for December fell by -1.0%, which ran contrary to an expected +1.2% gain, and obviously was a bit of a disappointment. Single family home sales dropped by -1.4%, which were offset somewhat by condo sales, which gained +1.7%. From a regional level, weakness in the Midwest (nearly -6%) and South overwhelmed gains in the Northeast and Western portions of the country. Net-net, a choppy report, but not entirely surprisingly considering the time of year we’re in.
(0) The FHFA home price index, that takes into account prices of homes with Fannie Mae/Freddie Mac mortgages, gained +0.6% for November, which just fell short of consensus by a tenth of a percent. The Pacific and Mountain regions experienced gains near two percent, and drove the broader upward movement. The more critical measure, year-over-year price movement, registered a gain of +5.6%, making 2012 the first positive year in six years.
(-) New home sales for December were lower than expected in December, falling -7.3% month-over-month, which ran counter to an expected consensus gain of +2.1%. Some of this difference was due to some revisions for November (the gain for which was boosted from +4.5% to over +9%), but the volatility is typical of this series and this time of year. Year-over-year, sales are up +9%, which is positive.
The new home sales story has been a positive one, and may very well contribute meaningfully to U.S. GDP in 2013—inching further towards normal after plodding along at very low levels for years coincident with the financial crisis. In fact, it could add up to a large percentage of the total GPP number—which, in the slow growth period we’re in, is meaningful. There are other effects as well, such as indirect demand for household goods and a general improvement in the ‘wealth effect’ that helps consumers feel richer and better able to spend (since their homes are worth more). Read more