Sales of New and Existing Homes Slide in November, But...
A month ago, a strong surge in sales of new as well as existing homes suggested the real estate (IYR) market (which never really began back-pedaling, but was stalling) was on the upswing again. In light of November's numbers, though, questions are once again raised.
On the other hand, though the seasonal adjustment is supposed to smooth out the data's inherent choppiness, we can't blindly take the lull to heart. Homebuyers (XHB) tend to lose interest near the end of the year, just as homebuilders are working hard to finish up the year's projects and not start anything that will be slowed down by winter weather.
In other words, take the November home sales data with a grain of salt. The seasonally-adjusted pullbacks aren't completely abnormal or unexpected.
On Tuesday we learned last month's seasonally-adjusted existing home sales pace fell from October's rate of 5.32 million to 4.76 million, versus expectations of 5.3 million. On Wednesday, the new home sales data followed suit. The country only sold new houses at an annualized rate of 490,000, up from October's rate of 470,000, but shy of the 505,000 economists were calling for.
It's not a step in the right direction. As is so often the case, however, a look at the longer-term trend offers a slightly more bullish perspective. As the chart of both data sets clarifies, the bigger trend remains a bullish one; lulls late in the year are normal (though admittedly, last month's existing home sales saw an oddly large drop).
Existing & new Home Sales Chart
For some additional perspective, existing homes sold at a pace of 4.95 million in November of 2014, while new homes sold at a clip of 449,000 that same month. Between the two tallies, total home-buying last month was actually up compared to the November-2014 total. Between that overall increase and the fact that the math of the so-called seasonal adjustment can be a little fuzzy in certain situations, it's too soon to sweat the headlines.
You'll also notice that inventories remain low, which could indirectly be crimping home sales, since there's simply less for picky homebuyers to choose from.