Existing Home Sales– Surprise to the Upside

November’s existing home sales rose 7.4% to 6.54 million units, after a marginal downward revision to 6.09 million units in October from 6.10. This increment was above market expectations, and likely driven primarily by what would have been the expiration of the first-time home buyer tax credit at the end of the November. The months’ supply of homes dropped to 6.5 in November from 7.0 in October and 11.0 in November 2008. Given the catalyst behind the recent surge in home sales and what is expected to be rising mortgage rates we could see some weakness in the data over the months ahead. But, a reduced inventory of homes and relatively stable prices are indicative of a bottom in housing.