U.S. existing home sales fall again in May

Existing home sales in the U.S. falls for the second straight month in May. Total sales dropped 0.4 percent sequentially, at 5.43 million, in contrast to consensus expectations of a recovery of 1.1 percent. April sales were downwardly revised by 10k and are now down 3 percent on a year-on-year basis.

Poor inventory levels continue to obstruct sales. Moreover, the combination of high home prices and increasing mortgage interest rates is making affordability a concern for prospective buyers. The median price of an existing home rose 4.9 percent year-on-year to USD 264.8k, an all-time high, while the average price rose 3.2 percent year-on-year. The months’ supply of existing homes is 4.1, widely where it was a year ago.

Properties typically stayed on the market for 26 days in May, unchanged from April, indicating towards a strong buyer interest. Looking ahead, any improvement in sales requires the supply side of the market to rebound so that buyers have more to choose from. A rise in supply should also help decelerate the momentum of home price appreciation.

Today’s data was weaker than expected and suggests lower brokers’ commissions in the second quarter relative to what was pencilled in.

“As a result, our residential investment tracking estimate was revised lower and took our Q2 GDP tracking estimate lower by one-tenth, to 3.5%, after rounding”, stated Barclays in a research report.

At 18:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 113.15. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
 

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