US: Home Resales Finally Improve in June

Jul 22 20, 14:50 GMT

U.S. existing home sales rose by 20.7% to 4.73 million units (annualized) in June. The increase came in slightly below the consensus forecast, which called for a 21.4% jump. On a year-over-year basis, existing home sales were still down 11.3%.
The improvement spanned both segments of the market. Sales of single-family homes advanced by 19.9% to 4.28 million units, while in the smaller condo/co-op market, sales soared by 29.4% to 440k units.
Sales increased in all four major regions in June. The West (31.9%) spearheaded the recovery, followed by the South (26.0%), the Midwest (11.1%) and the Northeast (4.3%).
The number of homes available for sale sat at a seasonally unadjusted 1.57 million units in June, down 18.2% compared to year ago levels. At the current sales rate, unsold inventory is at four-months of supply, down from 4.3 months in June 2019.
Low inventories and heavy buyer competition meant that home prices continued to accelerate, with the median existing home price increasing to 3.5% year-on-year (up from 1.9% in May).

Key Implications

After three consecutive months of contraction, existing home sales finally returned to growth in June. The improvement came as restrictions on activity were being eased across the country, leading to a pick-up in contract signings. Also encouraging is a continued rise in mortgage applications, reflecting sustained demand from buyers looking to take advantage of record-low mortgage rates.
Existing home sales are still 18% below the pre-crisis level. While improving economic conditions, solid demand and a low mortgage rate backdrop should support a continued recovery in home resales, the road ahead is unlikely to be smooth. In the near-term, the strongest headwinds will come from the recent surge in infections, which has already prompted the reintroduction of restrictive measures in several states and municipalities, with more looking to follow. In one of the latest developments, officials in Los Angeles warned this week that the city is close to returning to a full shutdown.