Home Sales Begin Rebound, Inventory Gauge Falls
"The homebuyer tax credit artificially boosted home sales in the Spring and then – after taking sales away from the future – the lapse of the credit caused a “hangover” in the Summer. Now sales are rebounding without artificial government support. Sales are up two months in a row and came in well above consensus expectations in September."
MP: The charts above help tell the "artificial stimulus and hangover" story. After the homebuyer tax credit ended, existing-home sales dropped precipitously by 27% in July, and the months supply of inventory increased to 12.5 months in July from 8.9 months in June. Now that market forces are prevailing again, the real estate market is rebounding on its own, with a strong boost from record-low mortgage rates (currently at 4.21%). Since the bottom in July of 3.84 million homes (seasonally-adjusted annual rate), sales have increased in the last two months to 4.53 million units in September, which is 18% above the July low. The months supply of home inventory fell two months in a row, to 10.7 months in September.