Seeking Alpha
Long/short equity, research analyst, portfolio strategy, newsletter provider
Profile| Send Message|
( followers)  

By David Urani

The National Association of Realtors reported existing home sales for December, and it was a pretty flat result, up 1% month to month and down 0.6% year over year to a reading of 4.87 million annually adjusted. That was virtually in line with the 4.90 million consensus estimate. Modest increases in the West and South were partially offset by modest declines in the Midwest and Northeast.

So they weren't really inspiring nor worrisome sales results, particularly when considering seasonal adjustments against 2012's warm winter. However, maybe the most notable part of the report was inventory, which was down 9.3% month to month to 1.86 million. That's the lowest point for supply since last January, which was actually the low for the cycle. Meanwhile months' supply went back down, from 5.1 months to 4.6 months, again the lowest since the 4.3 month January 2013 low.

That marks the fifth monthly decline in inventories in a row and is actually an encouraging trend with respect to homebuilders and prices in general. Over the past year, supply shortages have been widely reported in the housing market, which had been boosting prices and home construction, and these latest readings on inventory should bode well as we head toward the selling season, which typically starts to get going roughly around Super Bowl time and picks up as the weather gets warmer.

Source: Existing Homes: Sales Stalling, Supply Shrinking