Existing home sales came in a bit under Bloomberg Econoday Consensus , down 3.4% in October. Applying the CAB back to 1919, it has been shown to provide a lead of two to 14 months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. This slowdown in price increases this year was expected by several key analysts, and I think it is good news for housing and the economy. As evil as she is she is not alone, there are many at the Transylvania of news fox.
The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through September) in nominal terms as reported. In real terms, the National index is back to September 2003 levels, the Composite 20 index is back to May 2003, and the CoreLogic index back to January 2004. Prices increased (SA) in 20 of the 20 Case-Shiller cities in September seasonally adjusted. Inventory is still very low and falling year-over-year (down 4.5% year-over-year in September).
But it won’t be the sudden unleashing of pent-up demand we might have expected if the increase of living with parents were only about the housing bust and recession and not about longer-term demographic shifts. There is usually some additional spending with an existing home purchase – new furniture, etc – but overall the economic impact is small compared to a new home sale. Unsold inventory is at a 4.8-month supply at the current sales pace, up from 4.7 months in September.
According to the NAR, inventory decreased to 2.14 million in October from 2.19 million in September. Led by improvements in employment- and production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to -0.04 in October from -0.29 in September. The index’s three-month moving average, CFNAI-MA3, decreased to -0.20 in October from -0.03 in September. US News and World Report analysts found the following Top 10 High Demand Jobs for 2012.
October’s CFNAI-MA3 suggests that growth in national economic activity was somewhat below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year. This suggests economic activity was a little below the historical trend in October (using the three-month average). The following article by ABC news reads as though it was intended to cast a Chinese reserve currency system in a bad light.