US: Existing home sales in focus – BMO CM
|Analysts at BMO Capital Markets note that the US housing demand fundamentals ended 2016 on a strong note, reflecting rising household incomes (owing to both job and wage growth), banks continuing to ease lending standards, and consumer confidence hitting multiyear highs.
Key Quotes
“Mortgage interest rates continued to move up; they averaged 4.20% in December… the highest in more than 2½ years (according to Freddie Mac’s survey).”
“However, affordability still remains historically attractive, so higher borrowing costs can be absorbed without denting demand. In December, homebuilders reported the most robust activity levels (in terms of present and prospective sales) since the frothy days of the housing bubble (July 2005). This should nearly offset expected payback from November’s 5.2% surge in new home sales, resulting in a 0.5% drop in December to 589,000 annualized units, which is still the second highest pace in nearly nine years. Meanwhile, pending home sales slid 2.5% in November to a 10-month low, also portending a December setback in existing home sales. We look for them to slip 0.7% to 5.57 million units, which, again, is still the second highest existing sales pace in almost a decade. The solid demand fundamentals point to new multiyear highs on both fronts in 2017.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.