Housing data Thursday was quite favorable, as existing home sales rebounded, up 3.2% to a rate of 5.47 million, and 0.6% higher year over year. First time home buyers were a key bright spot and now represent a 34% share of overall sales, up from 31% in August and the highest level since July 2012. I guess millennials have had enough of mom and dad’s couch and skyrocketing rents. Inventory continues to be a major problem with only 4.5 months’ supply and is helping to drive prices higher. The median price was up 5.6% year over year to $234,000 from $221,700.
According to Lawrence Yun, the National Association of Realtors (NAR) chief economist, "Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in." He went on to say, "Unfortunately, there won't be much relief from new home construction, which continues to be grossly inadequate in relation to demand.” Foreclosures and short sales are also coming way down and now stand at 4% from 5% in August, a new low since NAR began tracking the data in 2008.
Despite the data, homebuilders are under pressure today as PulteGroup (PHM) reported earnings results, which were inline. However, gross margin pressure continued as land and construction cost increased, and the company lowered guidance. NVR Inc., the parent of Ryland Homes, also had disappointing earnings.
The major indexes have vacillating in and out of the red. Telecom is the laggard on disappointing earnings from Verizon. Health Care is leading with positive test results from Gilead Science (GILD) and Alexion Pharmaceuticals (ALXN), who is receiving FDA orphan drug status for its treatment of acute graft-versus-host disease.
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