The monthly existing home sales report is due today by the National Association of Realtors. The data will provide estimates of the value of the existing home sale conditions in the US economy.
The existing home sales data is a monthly measure of the sales volume of existing single-family units including condos and co-ops.
The report measures the sales of homes that are owned and occupied before being put on the market. The data covers more than 90% of total home sales and captures the completed transactions.
Economists polled forecast that existing home sales will fall 0.2% on the month in July.
This comes on the back of a 1.7% decline in existing home sales in June. The declines in June are seen as a pullback following the strong gains that were registered in May. Total existing home sales rose just 5.41 million compared to 5.27 million previously.
This was a 2.2% decline in existing homes on a year over year basis.
US Existing Home Sales, May 2019
Typically, the run-up to the summer months has a seasonal tendency to rise. At the same time, the underlying interest rate conditions also play a role.
So far, existing home sales have been weaker since June. The data for July is expected to continue this trend but at a slower pace than before.
Existing Home Sales Fall Despite Cheaper Mortgage Rates
The trend in the existing home sales comes amid the US economy seeing a rather stable period of interest rates. Mortgage rates have been falling steadily. However, this has failed to push up demand for existing home sales.
In the June release, the declines were seen due to a number of factors. These included lower inventory and pent-up demand. Typically, lower inventory pushes home prices higher. The median home sales prices have been rising for the 88th consecutive month.
On a year over year basis, existing median home prices rose 4.3% from the year before. However, the total housing inventory remained unchanged from a year ago.
There were increases in prices of both single-family units as well as condo and co-op sales. The higher costs could possibly be one of the reasons for the existing home sales report to be trending weaker.
However, given the currently expected decline, it would potentially mark a slower pace of declines compared to the previous month.
Can Existing Home Sales Pick Up in the Coming Months?
The current economic situation in the United States remains somewhat mixed. With the trade dispute with China ranking high, consumers remain cautious. The Fed cut rates in July and noted that it was only an adjustment.
Thus, despite a strong labor market, it is likely that consumers, both first-time homebuyers and investors, will be treading cautiously.
This comes amid the fact that the percentage of first time home buyers rose 35% in sales. This was up from 32% in the month before. The underlying data indicates that there is still demand as far as first time home buyers are concerned.