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One month of data does not an intermediate “Trend” make , but this is a data point that the bears were not prepared for. This month’s existing home sales came in +6.5% higher than last month’s # (see charts below), and more importantly, inventories came down hard, as a result.

The bears will cling and claw to the fact that 45% of these home sales came in “distressed” situations – but who cares? aren’t distressed homes still homes? No, these aren’t Wall Street homes – sales in the Northeast were actually down -1.4% again – but don’t sales in the West and the South being up +13.5% and +7.5% matter? You bet your Madoff they do… unloading the Main Street inventory overhang in this country matters, big time.

Months of supply came down to 9.3. This is down significantly from the peak and the 11.2 months recorded in November. As the facts change, I do – these facts are bullish; particularly in the face of a zero percent Fed funds rate, and an Obama administration focused on getting banks to lend to those seeking new lows in 30 year mortgage rates.

Bottoms are processes, not points…
KM

Keith R. McCullough
CEO & Chief Investment Officer