US: Weakness in housing data – Nomura

Analysts at Nomura note that US existing home sales fell 0.6% m-o-m in June to an annualized pace of 5.38mn, below expectations (Nomura: +0.1% to 5.44mn, Consensus: +0.2% to 5.45mn), marking the third consecutive monthly decline.

Key Quotes

“As has been the case for some time now, inventory shortages continue to plague the market for existing homes, worsening affordability and dampening sales.”

“On the upside, housing inventory increased on a y-oy basis for the first time since mid-2015, with supply at the current sales pace registering 4.3 months.”

“Further increases in inventory would be a welcome sign for the housing market, as demand will likely remain steady in light of a low unemployment rate and firm income growth.”

“GDP tracking update: Yesterday’s existing home sales report for June included negative revisions to sales activity in May and a somewhat lower-than-expected print for June, implying slightly less residential investment during Q2. However, after rounding, our Q2 GDP tracking estimate is unchanged at 4.6%.”