Instant View: Reaction to existing home sales data

NEW YORK (BestGrowthStock) – Sales of previously owned U.S. homes rose more than expected in September, an industry group said on Monday, indicating the housing market was stabilizing at weaker levels.

KEY POINTS: * The National Association of Realtors said sales increased 10 percent from August, rising for a second straight month, to an annual rate of 4.53 million units. * August’s sales pace was revised slightly down to a 4.12 million-unit pace. * Analysts polled by Reuters expected existing home sales to increase 4 percent to a 4.30 million-unit pace from the previously reported 4.13 million units in August.

COMMENTS:

MICHELLE MEYER, SENIOR U.S. ECONOMIST, BANK OF AMERICA MERRILL LYNCH, NEW YORK:

“This was considerably higher than expectations, but it is not time to break out the champagne bottle. The increases in August and September are largely a payback from the collapse in home sales in July. So, although home sales are better than the previous two months, they are still considerably below the first half of the year. The same story can be told for months’ supply. The drop in supply is certainly an improvement, but housing supply is still outpacing demand. This report does not change our outlook and we expect home prices to fall another 5 to 8 percent and it is fair to say we will not see a bottom until the third quarter of next year. The housing market is still far from normal.”

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK + CO, NEW YORK:

“The data is an improvement off a very depressed level but with the robo-signer, foreclosure moratorium taking center stage at the very end of September which today’s figure didn’t capture and neither will October — this number measures closings — the figures toward year-end will look much different as distressed homes made up 35 percent of September sales.”

TJ MARTA, CHIEF MARKET STRATEGIST, THE MARTA REPORT, SCOTCH PLAINS, NEW JERSEY:

“Existing home sales was a nice number, but we’re coming off some extraordinary lows. It will take a lot more than this to get bulled up on the housing market, but the report points to some signs of stabilization not only in the housing market, but in the economy more broadly.”

RUDY NARVAS, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK:

“It was better than expected, you saw sales increase across the board, across all regions. Overall it was a pretty strong report — you saw homes available for sale decline which meant the inventory of unsold homes fell to its lowest rate since June. We are going to have to wait and see if this is a continuing trend or not, but the fact that it is a rise across the regions is a good sign.

“If you look at underlying consumer demand, households are still deleveraging and overall demand is a big problem which is restraining corporations which are sitting on mounds of cash.”

JOE MANIMBO, CURRENCY TRADER, TRAVELEX GLOBAL BUSINESS PAYMENTS, WASHINGTON:

“Existing home sales were far better than expected. That did suggest that perhaps the housing market is starting to stabilize. As a result, the positive number helped to give the dollar a modest boost off its overnight lows.”

MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK:

“The data’s much better than we had expected but it will have zero impact on the course of U.S. monetary policy, which is on railroad tracks right now and heading in one direction, with nothing that could possibly derail it. Bernanke’s mind is fixed on quantitative easing and that’s what we’ll get next week. On housing, I think we got overly pessimistic over the summer, and incoming data since then has been more encouraging. I see U.S. growth of 2-3 percent over the next year — below our historic average but still respectable.”

JIM O’SULLIVAN, CHIEF ECONOMIST, MF GLOBAL, NEW YORK:

“The level is still very low, but it looks like sales are recovering again after the post-tax credit plunge. It’s pretty clear that the plunge from a couple of months ago exaggerated weakness.

“The current foreclosure situation is a potential negative. Less foreclosures mean the supply of these homes for sale will go down and people will be more reluctant to buy them.

“The big drag on housing ended a year ago, but there is no sign of sustained strength.”

GARY SHILLING, PRESIDENT, A. GARY SHILLING & CO. INVESTMENT RESEARCH FIRM. SPRINGFIELD, NEW JERSEY

“The number remains low, though it was higher than expected. But at these levels I’d say it’s going nowhere. Prices are down year-over-year, which reflects that the housing industry is still very troubled. We know we’re going to see a lot more foreclosures and sales of foreclosed houses, which will further depress prices.

“Housing remains a troubled industry, and there’s a huge excess inventory overhang. I don’t think there’s much optimism to take from this data, especially as we await additional foreclosures.”

ZACH PANDL, U.S. ECONOMIST, NOMURA SECURITIES, NEW YORK

“We’ve been looking for a continued recovery here and I think the September data shows that the post-tax credit bust in home sales has come to an end and we are now on a gradual recovery path.

“It’s interesting that prices softened up a little bit more, and I think it’s important to keep in mind that the level of home sales is still quite low. To have definitive evidence that the housing market is improving I think we would need to come off of these lows.”

MARKET REACTION: STOCKS: U.S. stocks (Read more about the stock market today. ) added to their earlier gains after the data. BONDS: U.S. Treasury debt prices held steady at higher levels. DOLLAR: U.S. dollar trimmed its losses versus the euro.

Instant View: Reaction to existing home sales data