US Economic News—Existing Home Sales

April saw some good data in the US housing market.

• Existing Home Sales rose +3.4% m/m (+10.0% y/y) to a 4.62 million annual rate (AR) versus Bloomberg consensus of +2.9% m/m and 4.61 million AR
• Median existing home price rose +8.4% m/m (+15.9% y/y) to $221,700
• Supply of existing homes for sale +9.5% m/m (-20.6% y/y) to 2.54 million
  • Months of supply rose to 6.6 months from 6.2 months

Existing home sales were slightly ahead of expectations, helping extend the generally upward trend that began in the middle of 2011 (and extends the rebound off the fall 2010 bottom—see Exhibit 1). Prices continued rebounding in April (see Exhibit 2), with month-over-month appreciation well above seasonally strong norms following weakness in December and January. National Association of Realtors’ (NAR) chief economist, Lawrence Yun, noted a pickup in buyers planning to live in houses—rather than buying as investments—and that the reduction is helping support prices. All-cash sales (typically investors) fell to 29% in April from 32% in March. First-time buyers rose to 35% from 33% in March.

We believe the data increasingly suggest a recovery in residential real estate fundamentals. With mortgage rates extremely low (3.91% per NAR in April), supply normalizing and continued economic improvement likely, the housing market should continue improving. In our view, a healthy rebound in the housing market is additive but not required for ongoing economic growth.

Exhibit 1: Existing Home Sales Versus Pending Home Sales

Source: National Association of Realtors, Thomson Reuters.

Exhibit 2: Existing Home Sales and Median Price

Source: National Association of Realtors, Thomson Reuters.