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Strong Home Sales


Overview: While home sales were stronger than expected, the economic data released over the past week was roughly neutral overall, and its impact was minor. Mortgage rates ended with little change ahead of key U.S. and European central bank meetings.

 

Despite a continued lack of inventory in many regions, September was a surprisingly good month for home sales. Existing-home sales, which make up about 90% of the market, unexpectedly jumped 7% from August to the highest level since January. The median existing-home price of $352,800 was 13% higher than last year at this time. Inventory levels were down 13% from a year ago, at just a 2.4-month supply nationally, well below the 6-month supply that is considered a healthy balance between buyers and sellers. New-home sales, which account for the remaining 10% of the market, also exceeded the consensus forecast by a wide margin. In September, new home sales surged 14% from August to the highest level in six months. The median price of a new home was $408,800, which was 19% higher than last year at this time and a new record high. In general, the pace of both new and existing sales is being dictated by the supply of homes available each month.

In economic terms, durable goods are items that last three years or longer, tend to be expensive, and generally are purchased infrequently, such as large appliances and vehicles. In September, new orders of durable goods fell 0.4% from August, which was less than expected, but the results for August were revised lower. Despite the slight weakness this month, durable orders were a massive 23% higher than a year ago. Excluding the transportation category, which contains mostly aircraft orders that are highly volatile from month to month, new orders matched expectations with an increase of 0.4% from August.

 

Existing-Home Sales (millions)


Week Ahead

October 28 — European Central Bank meeting

October 28 — Third-quarter gross domestic product (GDP)

October 29 — Core Personal Consumption Expenditures (PCE) Price Index

November 1 — Institute for Supply Management (ISM) Manufacturing Index

November 3 — ISM Services Index

November 3 — U.S. Federal Reserve meeting

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