Thursday saw Existing Home Sales shoot up 12.3% in December, to an annual rate of 5.28 million, well ahead of the 4.87 million rate the consensus expected. Overall, existing home sales are off 2.9% compared to a year ago, but that's when sales were artificially boosted by the homebuyer tax credits. All regions showed sales gains in single family homes, condos and coops.
The supply of existing homes dropped to 8.1 months from 9.5 months in November. The pace of existing home sales is up 38% since July and sales are now only around 5% off the long-term trend, which has been a 5.5 million annual pace. All this has happened without government tax credit support. Smart buyers don't want to miss out on housing affordability that's at its highest level in 40 years.
Earlier in the week we saw housing starts drop 4.3% for December to a 529,000 unit annual rate. But colder temperatures and more snow than usual slowed starts in many parts of the country. Home completions actually increased for the month, while building permits shot up a strong 16.7%, to a 635,000 annual rate. The not so good news is permits are off 6.8% from a year ago and starts are down 8.2% compared to last year.
Review of Last Week
SHORT WEEK FALLS SHORT... The holiday shortened week ended its four days of trading with only the Dow ahead, the S&P 500 and the Nasdaq both dropping a bit. What bothered investors were some Q4 corporate earnings that fell short, plus more worries that China will hike its interest rates to cool down an overheating economy, already growing at about a 10% annual rate.
Earnings disappointments included a couple of the big financials, although three others in the sector beat expectations. Beyond that, General Electric, IBM, and Google all reported strong, better than expected Q4 earnings. GE even went so far as to forecast increasing profits in the years ahead. Apple then showed up to hit the ball out of the park with Q4 revenues up 70.5% year over year, blowing estimates out of the water with ease. But it was unfortunate to learn that Apple CEO Steve Jobs is taking another indefinite leave to deal with health challenges.
The Empire State Index, which gauges manufacturing in New York, grew to 11.9 in January from 9.9 the previous month, reflecting manufacturing gains across the country. New weekly unemployment claims dropped by 37,000, putting the four-week moving average at 412,000, its lowest level since July 2008. Meanwhile, continuing claims dropped to 3.86 million, their lowest number since October 2008.
Earnings disappointments included a couple of the big financials, although three others in the sector beat expectations. Beyond that, General Electric, IBM, and Google all reported strong, better than expected Q4 earnings. GE even went so far as to forecast increasing profits in the years ahead. Apple then showed up to hit the ball out of the park with Q4 revenues up 70.5% year over year, blowing estimates out of the water with ease. But it was unfortunate to learn that Apple CEO Steve Jobs is taking another indefinite leave to deal with health challenges.
The Empire State Index, which gauges manufacturing in New York, grew to 11.9 in January from 9.9 the previous month, reflecting manufacturing gains across the country. New weekly unemployment claims dropped by 37,000, putting the four-week moving average at 412,000, its lowest level since July 2008. Meanwhile, continuing claims dropped to 3.86 million, their lowest number since October 2008.
For the week, the Dow ended up 0.7%, at 11872; the S&P 500 was off 0.8%, to 1283; and the Nasdaq dropped 2.4%, ending at 2690.
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