Existing home sales review: Q2 GDP tracking estimate remains unchanged - Nomura

Analysts at Nomura reviewed today's data from the US in the existing home sales.

Key Quotes:

"Existing home sales fell 1.8% m-o-m to an annual rate of 5.52mn units in June, below consensus (Nomura: -1.1% to 5.56mn, Consensus: -0.9% to 5.57mn), which is a slight slowdown from the 5.62mn pace in May. Single family home sales fell 2.0% while multifamily home sales were unchanged. While the fundamentals for underlying demand remained firm (such as job creation and income gains), the supply of previously-owned homes remained lean, possibly weighing down contract closings in June. Homes on the market for sale fell 7.1% y-o-y, with the months’ supply indicator at 4.3 in June, a slight improvement from 4.2 months in May, but likely a result of slower sales in June. With low levels of inventories, the median price of previously owned homes reached USD 263.8k, up 6.5% y-o-y, highlighting a recent uptrend in home prices. Without a subsequent pick-up in supply, house prices are likely to continue to outpace wage gains over the medium term, exacerbating affordability for home buyers. 

GDP tracking update: Existing home sales data today, while weaker than expected, left our Q2 GDP tracking estimate unchanged at 2.5% q-o-q saar. Existing home sales fell more than expected in June, suggesting that brokerage fees and commissions, a component of residential investment, may have been slightly weaker than our estimate. However, after rounding, our Q2 GDP tracking estimate remains unchanged. Note that the first estimate of Q2 GDP growth from the BEA will be released on Friday."