Overview: As usual, trading volume was considerably reduced during the last couple of weeks of the year. The market reaction to the economic news was minor, and mortgage rates remained near record-low levels.
The remarkable rebound in the housing market has continued. In November, existing-home sales, which account for roughly 90% of the market, were 26% higher than a year ago and near the best levels since 2006. The median existing-home price was 15% higher than a year ago, also close to record levels. The one drawback was that inventory levels were down 22% from a year ago. The number of homes for sale was at a record-low 2.3-month supply nationally, well below the 6-month supply that is considered a healthy balance between buyers and sellers.
Sales of new homes, which make up the remaining 10% of the market, also continued at a blistering pace. In November, new home sales were 21% higher than a year ago, yet a lack of inventory has been a constraint in this area as well. Builders say that they are putting up new homes as quickly as possible, but that a lack of land, labor, and materials is limiting the pace of construction.
Last week, Congress passed a $900 billion coronavirus relief bill, which will provide additional assistance to households, small businesses, and healthcare providers. The bill includes an extension of supplemental unemployment benefits of $300 per month and direct payments of $600 to qualifying individuals. Lawmakers continue to discuss whether to increase the amount of these payments.
Investors will continue watching COVID-19 case counts and vaccine distribution next week, and the Georgia Senate election will take place on January 5. The Institute for Supply Management (ISM) Manufacturing Index will be released on January 5, followed by the ISM Services Index on January 7. The monthly Employment Report will be released on January 8, and these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic report of the month. Mortgage markets will close early on Thursday and will be closed on Friday for the New Year’s holiday.
Existing Home Sales (millions)