Existing Home Sales Softer Than Expected

The housing market firmed in the early Spring but has since flattened out. Existing home sales came in softer-than-expected at a 5.270 million annual rate in June which, however, is right in line with the 3-month average of 5.280 million. This average started the year at roughly 5.1 million.

Single-family resales fell 1.5 percent in the month to a 4.690 million pace while condo sales, the second and much smaller component in the report, fell 3.3 percent to 580,000. By region, the Northeast and Midwest posted mid-single digit monthly gains with the South and West posting mid-single digit declines.

For home sellers, the good news is centered in prices which rose a sharp 2.7 percent to a median $285,700. For buyers, the good news includes a 1.0 percent rise in supply on the market, at 1.930 million which nevertheless is dead flat on the year at zero.

Sales year-on-year are in negative ground at minus 2.2 percent in what should be an easy comparison against a weak 2018. Resales have only a limited impact on residential investment in contrast to new home sales which will be posted tomorrow. But if trends hold, even flat results for new home sales, given firmness early in the quarter, could still make for the first positive residential contribution, however modest, to GDP since 2017.

Lack of momentum in housing, which is unexpected this year given the strength of the jobs market and the fall in mortgage rates, will be one factor that doves can cite at next week's FOMC meeting in favor a rate cut. Watch Friday for the first estimate of second-quarter GDP.