US Existing Home Sales: Despite June’s slide, upward trend expected to prevail - Wells Fargo

Data released today showed that existing home sales in the US dropped 1.7% to a 5.27 annual rate. Despite the drop, analysts at Wells Fargo see that sales remain fairly solid and point out lower mortgage rates will likely keep resales on an upward trend for the remainder of the year.

Key Quotes: 

“Low mortgage rates have yet to translate to a sustained pick-up in home sales. Total existing home sales fell 1.7% during June to a 5.27 million-unit pace. Both single-family and condo sales weakened during the month, dropping 1.5% and 3.3% respectively. Compared to a year earlier, total sales are down 2.2%.”

“Total sales during May were revised higher and over the past three months have averaged 5.28 million. This marks a significant improvement from the final three months of 2018, when the shock of higher mortgage rates slowed sales to an average 5.14 million-unit pace.”

“While there has been some improveent on this front over the past year, inventories remain well  below historical levels.”

“More moderate price appreciation also reflects somewhat stronger demand for homes at lower price points.”

“While we anticipate prices to continue to cool, strengthening demand in the face of limited supply will keep home price appreciation firmly in positive territory in coming months. Easing prices are also helping homes to sell fairly quickly.”

“We expect the downturn in mortgage rates to keep resales on an upward trend for the remainder of the year. Over the past four weeks, the 30 year commitment rate has averaged 3.76%, the lowest since 2016.”