U.S. May Existing Home Sales - Resilient to headwinds
May existing home sales have seen a stronger than expected 3.2% increase to 4.17m, taking the level to the highest since December. This shows resilience to higher mortgage rates and fading hopes for Fed easing, but it follows three straight gains in pending home sales after they hit a record low in January.
This is the second straight monthly gain for existing home sales and also the second straight positive yr/yr outcome at 3.2% after five straight negatives. We would not read too much into the upside surprise with trend still having limited direction. New home sales were weak in April but the existing home sales gain hints at scope for a bounce in May. May’s NAHB homebuilders’ index recovered after a dip in April.
Existing home sales rose in three of the four regions, with the exception being a flat outcome for the West, surprising given that the West was the only region to decline in April. The supply of unsold homes remains solid at 4.5 months, unchanged from April and down only marginally from 4.6 a year ago.
The median price rose by 2.8% on the month, a third straight rise exceeding 2.0% though the gains are largely seasonal. Yr/yr growth picked up to 1.3% from 0.8%, but remains below March’s 1.5%. The data is modestly improved for both sales and prices, but trend is still fairly subdued.
