Location: Toronto
Author: RBC Economic Research
Date: Tuesday, January 26, 2010
Existing home sales in the United States declined 16.7% month-over-month in December to 5.45 million annualized units. The prior month’s 6.54 million figure remained unrevised. Home prices, however, rose 1.5% relative to December 2008.
Sales of existing homes in the United States declined 16.7% month-over-month in December compared to the 9.8% month-over-month decline expected within financial markets. This brought sales to 5.45 million annualized units in December compared to the prior month’s 6.54 million reading. The weakness was evident in both single family homes (-16.8%) and condos and co-ops (-15.4%).
The annual change in median prices of existing homes in December rose 1.5% marking its largest gain since May 2006. In terms of inventories of unsold homes, as measured by months’ supply of unsold homes on the market, December’s figure rose to 7.2 from November’s 6.5. However, the absolute number of unsold homes for sale declined to 3.29 million, pushing it to its lowest level since March 2006.
Today’s reported decline in existing home sales for the month of December was likely a reflection of the uncertainty surrounding whether the first time home-buyers tax credit would be extended past the end of November 2009. (The program was eventually extended to the end of April 2010. As well, this program likely contributed to sales being brought forward to earlier months.) This earlier strength likely resulted in residential investment growing at an annualized double digit pace resulting in a positive contribution to overall growth. In terms of growth in the broader U.S. economy, we are monitoring a 4.5% annualized gain in GDP when the figure is released this Friday.
To subscribe or visit go to: http://www.riskcenter.com