Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  Existing Home Sales Increased 2.6% in June
Posted Under: Data Watch • Home Sales • Housing

 
Implications: Housing keeps growing...Plow-Horse-like. Which, if you think about it, is a huge disappointment. Yes, existing home sales grew a strong 2.6% in June, rising to a 5.04 million annual rate. But, total sales are still 6.3% below the peak in July 2013. After an eight month slide, existing home sales have now increased for three months in a row. Why did housing slow between July 2013 and March 2014? No one knows for sure, and there are more theory's out there than analysts, but a lack of inventory was fingered by realtors themselves. Today's report suggests that is changing. Inventories are up six months in a row, including a 2.2% jump in June. They are 6.5% higher today than they were a year ago. More inventory should help spur sales in the months ahead. One key reason for growing inventories is that home prices continue to move higher (median prices for existing homes are up 4.3% from a year ago). In other words, recovering home prices are getting more potential sellers into the market, which will increase sales. Either way, whether existing home sales are up or down, these data should not change anyone's impression about the overall economy. Remember, existing home sales contribute almost zero to GDP. Also, despite recent gains in sales, credit remains tight, making it relatively hard to get a mortgage. In June, 32% of all sales were all-cash transactions. However, we do not believe higher mortgage rates are noticeably holding back sales. The US had a bubble in housing during 2003-05, when 30-year mortgage rates averaged 5.8%. Today they are 4.3%. We remain convinced that the underlying trend for housing remains upward. In other housing news this morning, the FHFA price index, for homes financed with conforming mortgages, was up 0.4% in May and is up 5.5% from a year ago. Given the rise in inventory coming on the market, expect the price gains to continue, but at a slower pace than in the past year. On the manufacturing front, the Richmond Fed index, a measure of factory sentiment in the mid-Atlantic region, rose to +7 in July from +4 in June, signaling continued gains in industrial production in July.

Click here for PDF version
Posted on Tuesday, July 22, 2014 @ 12:14 PM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2021 All rights reserved.