Home Sales Wobble, But House Prices Continue Higher

Home Sales Wobble in 2015, But Long-Term Growth Trend is Poised to Resume

The real estate (XHB) (IYR) picture ended up being a bit of a mixed one through October, with the pace of existing home sales sliding, while the pace of new home sales perked up. In both cases, last month's moves reversed course from the directions take in September, though in both cases the bigger trends appear to have somewhat stagnated.

Last month, sales of existing homes pulled back to a pace of 5.36 million units, while the pace of new home sales ramped up to 495,000 homes. In both cases, inventories were lighter than the norm, though availability of new homes for sale is modestly ramping up. Existing home inventory isn't growing at all, though.

Home Sales Chart

Still, prices are firming up, pointing to broad strength from this sliver of the economy.

Though a month behind the home sales activity data, both the Case-Shiller Index of home prices and the FHFA Purchase Price Index of homes moved to multi-year highs in September. Both either renew or prolong steady growth trends that have been n place since 2012.

Home Prices Chart

Although sales activity has been choppy this year and a rate hike is looming, a string of interest rate increases isn't likely. Rather, a one-off rate hike -- two at the most -- is expected. Once would-be homebuyers recognize and believe this, the longer-term progress should resume.