U.S. existing home sales disappoint in June

Existing home sales in the U.S. dropped 1.7 percent to 5.27 million units in June, as compared with market expectations of a fall of just 0.4 percent. Meanwhile, the figures for prior month was upwardly revised by 0.4 percent to 5.36 million.

Single family sales dropped 1.5 percent, while condo/co-op sales fell 3.3 percent in the month. Activity came in mixed throughout the regions, with existing home sales dropping around 3.5 percent both in the South and West, while rebounding around 1.5 percent in the Northeast and Midwest.

The number of homes available for sale rose to a seasonally unadjusted 1.93 million units from 1.91 million in May, which is the same from a year ago. At the current sales rate, unsold inventory is at a 4.4-month supply, rising from 4.3 months in both the month prior and June of last year.

Median existing home prices in June and in the second quarter as a whole rose 4.3 percent year-on-year, which makes a mild acceleration from the 3.8 percent print in the first quarter. First-time buyers made up 35 percent of sales in June, rising from 32 percent the month prior and 31 percent in June 2018.

Today’s was another disappointing housing report given that the activity came in below consensus expectations. Looking past the monthly volatility, the sales trend that has developed in the past several months seems more promising, noted TD Economics in a research report. On the contrary to 2018 when activity dropped in each of the four quarters, sales are on a stronger path at the moment, with gains averaging 5 percent annualized in the initial two quarters of 2019. The increased participation of first-time buyers in June marks another light positive touch.

“There is good reason to believe that this trend will continue as demand receives a boost from lower mortgage rates, which have already fallen some 100 basis points since the end of 2018. The supply side however, remains a constraint. With inventory still near historically-low levels, expected gains are likely to remain moderate in nature. In addition, the demand/supply mix is likely to continue providing some support to prices, which accelerated mildly in the second quarter”, added TD Economics.

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