The upswing in the housing sector appears to be continuing, as two reports came out indicating growth in the key sector of the economy.
In the first metric, sales of previously-owned U.S. homes rose to 4.79 million in October, representing a 2.1% increase from the previous month and a 10.9% year-on-year rise. This total beat analyst predictions of 4.74 million sales, according to an analysis by Miller Tabak & Co. Chief Economic Strategist Andrew Wilkinson (see chart below).
In a second and related round of good news, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, released Monday, shows that homebuilder confidence in the single-family housing market rose by five points to 46 in November, marking the seventh consecutive month that confidence has risen.
Within the five-point rise, a component gauging current sales conditions posted the largest gain—eight points—while the component measuring sales expectations for the next six months gained two points. All four geographic regions saw increases in builder confidence.
The Wall Street Journal Market Data Center reports that the November NAHB gains are strongly centered in current sales which points to strength for new home sales and for housing starts. It also noted that the report showed, "declining inventory of distressed homes is a plus for builders who however continue to complain about tight credit conditions."
The existing home sales increase encompassed sales of both multi-family units, which rose by 3.6% and, to a lesser extent, those of single family homes, which increased by 1.9%. Geographically speaking, most of the increase came in the South, where sales rose from 1.88 million to 1.92 million, matching an August peak, according to Wilkinson. Sales also increased in the West and the Midwest, but dropped slightly in the Northeast.
Also up were median home prices, which rose by $300 over the previous month to $178,600. On a year-on-year basis, prices rose by 11.1%, the fastest pace since November 2005.
Copper, a commodity highly correlated to housing rose sharply Monday morning (see chart below). "You've got every broad-based risk asset rallying in a big way today," says Spencer Patton, founder and chief investment officer at Steel Vine Investments. "So it makes sense that copper is being pulled higher."
Patton says that although the housing data is not the only factor in copper's rally, it could help to reverse a weeks-long decline in prices. "I think the housing data is certainly a supportive element," he says. "And it may be more important to help change the story a little bit to where prices can break out of a downtrend."