US: Existing Home Sales to moderate during 2021 – CE

Housing data from the US released on Friday came in above expectations with Existing Home Sales reaching the highest level in 14 years in December. Matthew Pointon, Property Economist at Capital Economics considers that despite the margin gain in December, home sales are set to fall back over 2021. 

Key Quotes:

“Existing home sales surprised on the upside in December with a rise of 0.7% m/m, which took sales to 6.76m annualised, just under their recent 15-year high. Admittedly, the gain was small, and the annual growth rate slowed for the second month in a row to 22.2%. But we had expected a small fall in sales.”

“After all, new home sales, which lead existing sales by around a month, dropped by a substantial 11% m/m in November. Moreover, the pending home sales index declined in each of the three months to November.”

“We expect a moderation in demand to bring existing home sales back to their pre-COVID trend. As will record low inventory – the number of homes for sale dropped by 23% over 2020. We expect sales to end the year at around 5.7m annualised.”