Pantheon Macroeconomics"A correction was due."Existing home sales plunged in November.
According to the NAR, the pace of sales fell by 6.1%, to an annualized rate of 4.93 million units.
Wall Street had been expecting sales to fall 1.1% to 5.20 million units.
Today's numbers showed the largest drop since July 2010.
Economists had a mix of reactions to the data:
- Bank of Tokyo-Mitsubishi's Chris Rupkey said the October sell-off in stocks may have shooed away some first-time buyers out of fear. He wrote in a note: "Maybe October's 10% stock market drop worried some homebuyers. Stock market weakness on Russia/Ukraine and world growth concerns and Ebola fears." However, he said the plunge is temporary, considering the fact that home buying activity usually slows towards the end of the year. "What counts is that home prices are up 5.8% from this time last year which should be good news for consumers. The losses after the housing bubble burst in 2006 are getting further away in the rear-view mirror."
- Ian Shepherdson at Pantheon Economics notes that November's data is a "correction not catastrophe." He wrote: "A correction was due after two straight months of overshooting relative to the pending sales index. But sales fell even further as a result, we think, of the severe cold weather and record early snowstorms across parts of the country late in the month."
- Bricklin Dwyer at BNP Paribas noted that every single region except the Northeast saw double digit declines year over year. " Existing homes sales were on a significant upward trend that has been dented substantially by November sales," he wrote in a note.
- Despite the big miss, BMO Capital Markets Senior Economist Jennifer Lee wrote that it's positive that first-time homebuyers made up 31% of all sales, the most since October 2012."Granted this is still far from the 40%-to-45% range during normal times but after spending the last 19 months below 30%, this increase is a very encouraging development," Lee wrote. "All in, housing will receive solid support from efforts to relax mortgage lending rules, easier rules to help first-time homebuyers get into the market (reducing their down payments' requirement), and steady job growth. This is likely a temporary setback."