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Takeaway: Here's an excerpt from a note to institutional subscribers from earlier today where our analysts dove into the existing home sales report.

As we've highlighted, there's limited usefulness in the Existing Home Sales (EHS) report on the sales side since the data is well-telegraphed by the Pending Home Sales report a month earlier. We show this in the 1st chart below, where we've offset the EHS data by one month to show its correlation to PHS on a 1-month lag.  

Despite the limited real-time utility in terms of demand trends, there is value in the data on inventory and the composition of sales (first-time buyers, cash buyers, investor share). This month we flag the still-anemic level of first time homebuyers (29% vs 2001-2008 average of ~40%).

Our Take on Existing Home Sales - chart2

Our Take on Existing Home Sales - chart3

TOTAL EXISTING HOME SALES:  Total EHS resumed its uptrend in September after stumbling in August. Sales rose 2.4% MoM to 5.17mn SAAR. Meanwhile, the year-over-year rate of change slowed to a decline of 1.7%, an improvement vs the 5.3% decline in August. From a growth perspective, the YoY comps get progressively easier through the balance of the year as we lap the rising rate environment of 2H13. 

For comparison, pending home sales have advanced +11.6% since the trough in March vs +12.6% for EHS and, given the recent pattern highlighted above, its likely we see a modestly worse sequential EHS print in October.