Bond Market Update

Data Recon

• Existing home sales decreased 1.5% in December to a seasonally adjusted annual rate of 4.02 million (Briefing.com consensus 3.96 million) versus a downwardly revised 4.08 million (from 4.09 million) in November. This marks the eleventh consecutive month of contracting sales. Total sales in December were down 34.0% from a year ago.
• The key takeaway from the report is that sales remained pressured by high mortgage rates and rising prices, sending the seasonally adjusted annual rate (4.02 million) toward its pandemic low (3.91 million) that was reached in May 2020.
  • The median existing home price for all housing types increased 2.3% year-over-year to $366,900, representing the 130th consecutive month of year-over-year gains. This extends the streak to a new record. The median price for single-family homes rose 2.0% year-over-year to $372,700.
  • Existing home sales across regions: Northeast (-1.9%); Midwest (-1.0%); South (-2.2%); and West (unch).
  • Median home prices by region year-over-year: Northeast (+1.6% to $391,400); Midwest (+2.9% to $262,000); South (+3.5% to $337,900); and West (up slightly to $557,900).
  • The inventory of homes for sale at the end of December was down 13.4% month-over-month at 970,000 units, but up 10.2% from a year ago.
  • Unsold inventory sits at a 2.9-month supply at the current sales pace, down from 3.3 months in November and up from 1.7 in December 2021. It remains well below the 6.0-months' supply typically associated with a more balanced market.
  • First-time buyers accounted for 31% of sales in December, up from 28% in November and up from 30% a year ago.
  • All-cash sales comprised 28% of transactions in December, up from 26% in November and up from 23% a year ago.
  • 57% of homes sold in December were on the market for less than a month, versus 61% in November, with properties typically remaining on the market for 26 days, up from 24 days in November and up from 19 days a year ago.
• Yield Check:
  • 2-yr: +7 bps to 4.19%
  • 3-yr: +6 bps to 3.82%
  • 5-yr: +7 bps to 3.55%
  • 10-yr: +6 bps to 3.46%
  • 30-yr: +5 bps to 3.61%