United States
Existing home sales in April totaled 5.57mm, below the estimate of 5.65mm and down from 5.7mm in March. As these figures measure closings where the contracts were most likely signed in the January thru March time frame, it should be considered somewhat dated. The April figure is pretty much in line with the year to date average of 5.61mm and up 2.4% above the average seen in 2016. While supply has been a major issue for the market, the available homes for sale in April rose to the most since October. Remember the last consumer confidence number that saw a sharp jump in the number of people that said it’s a good time to sell a home? Well, maybe we will finally start to see some more inventory. We’ll see because it’s certainly not coming in the lower end new home market. The rise in the number of homes for sale brought the months’ supply to 4.2 from 3.8 in March and that is also the most since October when it printed 4.4. These numbers though are still well below the long term average of about 6 months.
Home price gains continue on with their consistent 5-6% annualized increase with a 6.1% rise y/o/y, a number that is more than double the rate of CPI. Tell me what other major cost of living that is rising at this pace? Renting comes close but those gains are moderating. Yes, low mortgage rates limit the rise in monthly payments but you get my point. The median price rose to $287,500 which is just $2,300 from matching the record high.
Encouragingly within the data was the rise in the number of first time buyers to 34% from 32% in the month prior. While still below the historical average of around 40%, it’s the most in years.
Bottom line, while inventory levels improved, the NAR said “the median number of days a home was on the market” fell “to a new low of 29 days” (vs 34 in March and 39 one year ago) and they said “stubbornly low supply levels held down existing home sales in April” even though there was a notably increase in inventories as seen I mentioned. For the Spring transaction season so far it has been pretty good but the issue of persistent price gains and the modest increase in the building of newer, lower priced homes is still an overhang big picture wise.
Builder stocks are not doing much in response, again because the data is somewhat dated. The XHB etf is being impacted by LOW.
XHB 1 yr
I’m speaking at the Mauldin conference at 2pm so won’t be able to write on the FOMC minutes but just wanted to say this… After every FOMC meeting we hear from just about everyone one of the voting and non voting members in speeches in the 3 weeks before the minutes are released. Thus, we always have a good sense of what they are thinking, and therefore the minutes don’t provide much of any new news. We will hear about what some think, what several say, what most want and what a few believe on this, that and everything else on growth, inflation, the timing of rate hikes and when quantitative tightening will begin.
Bottom line, they seem to still be on track for a June and September hike and QT will likely be announced at the December meeting which would begin in 2018. This just as Janet Yellen is most likely going to exit stage left next February.
Peter is the Chief Market Analyst with The Lindsey Group. He is Co-CIO at Bookmark Advisors, a member of the Advisory Services Network and a regular CNBC Contributor.