US Existing Home Sales Jumped Last Month: Will The Data Surprise Again?
On Thursday, United States Existing Home Sales (MoM) data is scheduled for release. The US existing homes sales market refers to the buying and selling of previously owned homes in the United States. This market includes all types of homes, from single-family houses to condominiums and townhomes. The National Association of Realtors (NAR) compiles data on the number of existing homes sold each month, along with other key indicators such as median home prices, inventory levels, and the average time it takes to sell a home.
The US existing home sales market is driven by several factors, including interest rates, the state of the economy, and demographic trends. When interest rates are low, it becomes more affordable for people to purchase homes, which can lead to increased demand and higher prices. Conversely, when interest rates rise, it can discourage potential buyers, leading to lower demand and lower prices.
The US existing home sales market can be a significant indicator for the overall health of the economy. When homes are selling quickly and at high prices, it can indicate that people feel financially secure and are willing to make significant investments. This can lead to increased economic growth and job creation as more people purchase homes and invest in renovations and other home-related projects.
In February 2023, there was a significant increase in completed transactions of single-family homes, in the US existing home sales market. Specifically, there was a 14.5% surge to a seasonally adjusted annual rate of 4.58 million, which represented the largest monthly percentage increase since July 2020. This rebound was unexpected as markets were anticipating a smaller 5% increase.
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Figure 1: Existing Home Sales, Tradingeconomics
There is uncertainty regarding the housing market's future. The drop in Treasury yields and consequently mortgage rates due to the collapse of some banks is affecting the situation. However, there is also anticipation for more stringent lending requirements and conditions for prospective home buyers, resulting from the turmoil.
Although construction firms are facing difficulties in finding skilled workers and dealing with high costs of materials, builder confidence has increased for the third consecutive month in March. This boost in confidence could potentially lead to more construction projects, which could help alleviate the housing inventory shortage problem. This issue is partially driven by homeowners who secured low-interest rates being hesitant to sell their homes.
The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.