US: Existing Home Sales

Wed Jun 20 09:00:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
Existing Home Sales - Level - SAAR 5.500M 5.440M to 5.650M 5.430M 5.460M 5.450M
Existing Home Sales - M/M Change -0.4% -2.5% -2.7%
Existing Home Sales - Yr/Yr Change -3.0% -1.4% -1.6%

The new home market is on the rise in sharp contrast to the resale market which is flat at best. Existing home sales slipped 0.4 percent in May to a lower-than-expected 5.430 million rate and a year-on-year decline of 3.0 percent. Part of the lack of sales traction may be due to prices which, in contrast to the decline in sales, rose 2.7 percent in the month to a record $264,800 for a year-on-year gain of 4.9 percent. Supply improved in the month but remains thin, up 2.8 percent to 1.850 million units on the market with supply relative to sales at 4.1 months vs 4.0 months in April.

The resale market remains a dead weight and is limiting the housing sector's contribution to overall economic growth. In regional data, the Northeast popped higher in the month but remains the weakest resale region at an 11.7 percent yearly decline with the West at minus 4.1 percent and the Midwest at minus 2.3 percent. Sales in the South, which is by far the largest resale market, are unchanged on the year.

Market Consensus Before Announcement
Existing home sales fell below Econoday's low estimate in April and a sizable bounce back is expected in May, to a consensus annualized rate of 5.500 million vs April's 5.460 million. Even with a better showing, resales have been stubborn and weak as April's year-on-year rate was in the minus column at negative 1.4 percent.

Existing home sales tally the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Even though home resales don't always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer.

Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic "ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home resales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.