- New Home Sales for December fell to 604K versus estimates of 647K and 634K in November.
BOTTOM LINE: Purchases of new homes in the US fell more-than-expected in December, Bloomberg reported. The median price of a new home fell to $219,200 during the month. At the current sales pace, inventories rose to 9.6 months worth of new homes. The average 30-year mortgage rate has plunged 70 basis points over the last month to a historically low 5.48%. It has also dropped 127 basis points from the middle of last year. Fed fund futures now imply an 84% chance for a 50 basis point cut at the upcoming meeting and a 14% chance for a 25 basis point cut. I continue to believe home sales will surprise on the upside over the coming months on pent-up demand, less economic pessimism and very low rates.
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