October existing home sales blowout
Specifically, existing home sales soared 10.1% in October. That was much better than the 2.3% increase in sales that was expected. At 6.1 million units, the seasonally adjusted annual rate of sales was the highest since February 2007.
Importantly, the supply of homes for sale dropped again -- by 14.9% year-over-year to 3.57 million. That is the lowest level since January 2007 and good for about 7 months of inventory at the current sales pace (down from 8 a month earlier). We are still oversupplied, and that's why median home prices fell 7.1% from a year earlier. But the excess inventory mountain is clearly shrinking.
We will clearly see some give back or "hiccup" in the numbers over the next couple of months as the lagged impact of the tax cut uncertainty makes its way into the numbers. But with the credit extended and expanded, the Fed continuing to manipulate the mortgage market, and the supply overhang shrinking, my forecast of stabilization remains on track. Or in plain English, the massive housing bust earthquake is behind us -- any setbacks from here on out will be more like mild aftershocks.