U.S. existing home sales rise in February

Existing home sales in the U.S. rose 3 percent in the month of February to 5.5 million, surpassing consensus expectations of a modest rebound to 5.40 million. Sales of existing single-family homes rose strongly by 4.2 percent sequentially, mainly driving the improvement in headline figure. Meanwhile, sales of multi-family homes fell 6.5 percent sequentially. Inventory continued to be stable at 1.72 million on a seasonally adjusted basis, close to a historical low. The month’s supply of existing homes remained stable at 3.4. Lean inventory, along with the stable rate of home price appreciation continues to pose a problem of affordability for prospective buyers.

Region wise, the recovery in sales was unevenly distributed. Sales rose considerably in the South and West by 6.6 percent and 11.4 percent, respectively. Meanwhile, sales fell in the Northeast and the Midwest.

The existing home sales report was stronger than anticipated and suggests higher broker commissions in the first quarter relative to what was penciled in, noted Barclays in a research report.

“As a result, we revised our residential investment tracking estimate higher, which boosted our Q1 GDP tracker by one-tenth to 1.8 percent, after rounding”, added Barclays.

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