US: Existing home sales declined in December 3.6% - Nomura

Analysts at Nomura note that US existing home sales declined in December 3.6% m-o-m to a pace of 5.57mn saar, below expectations (Nomura: -1.0% to 5.75mn, Consensus: -1.9% to 5.70mn).

Key Quotes

“November’s existing home sales were revised down slightly. The decline in existing home sales was broad-based across regions with the Midwest and Northeast having the largest declines. Some of the weakness in the Northeast may reflect an unusually warm November followed by a colder December, which may have shifted some activity to the earlier month. However, the National Association of Realtors (NAR) indicated that much of the broad-based declines across the regions can be attributed to the ongoing issue of low inventories and higher prices. This may continue to weigh on contract closings over the medium term. The supply of unsold existing homes declined to 3.2 months at the current sales pace, the lowest level since the beginning of the series in 1999, highlighting the continued shortage of available homes for sale.”

“GDP tracking update: Existing home sales declined by more than expected in December, implying less contribution from brokers’ commissions in Q4 (a subcomponent of private residential investment). However, separately, we revisited our underlying assumptions for inventory accumulation in Q4, increasing our estimates of December wholesale and ex-auto retail inventories. Altogether, we raised our GDP tracking estimate 0.2pp to 2.6% q-o-q saar. Note that the advance trade and inventories release, previously scheduled for Thursday, has been moved to Friday at 8:30 EST owing to the government shutdown.”