US: Existing home sales likely to decline 1.1% m-o-m for June - Nomura

Despite a lean supply of previously owned homes for sale, steady demand for housing has remained supportive for sales, but analysts at Nomura are forecasting decline in existing home sales of 1.1% m-o-m for June due to the slowdown in pending home sales.

Key Quotes

“In May, existing home sales increased by 1.1% m-o-m to an annual rate of 5.62mn, with healthy increases in both single and multifamily homes. For June, we forecast a 1.1% m-o-m decline to a 5.56mn annual pace. The forecasted decline reflects a slowdown in pending home sales in recent months, which tend to lead existing home sales by a month or two. Moreover, it is possible that the low supply of homes for sale on the market may have continued to weigh on pending home sales (contract signings), lowering existing home sales (contract closings).”

“In May, previously-owned homes available for sale fell by 8.4% y-o-y continuing a prolonged decline. Yet, we think underlying demand for existing homes remains healthy. Consistent with this view, mortgage application volume for home purchases increased by 3.5% in June. Further, labor markets have been improving solidly with strong job gains and low unemployment, which should be supportive of a steady increase in housing demand.”