Existing-home sales increased in June rising to 1.4% on a seasonally adjusted annual rate, snapping four consecutive months of declines, according to the National Association of Realtors. Three of the four major U.S. regions registered small month-over-month gains, while the fourth remained flat. However, all four areas notched double-digit year-over-year gains.
Total existing-home sales completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 1.4% from May to a seasonally adjusted annual rate of 5.86 million in June. Sales climbed year-over-year, up 22.9% from a year ago (4.77 million in June 2020).
A small comment was made by the NAR's chief economist, he highlighted that "supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales, home sales continue to run at a pace above the rate seen before the pandemic."
What Is It?
Measures monthly sales of previously owned single-family homes. Existing home sales tally the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends.
What Are The Fundamental Effects?
The actual effect on the economy is relatively small because no new ground is broken, however, sales of existing homes can indirectly stimulate economic activity. An increase in sales shows that buyers are confident about their jobs and future income growth. A sustained drop or rebound in existing home sales often portends a turning point in the economy. If strength in housing fires up inflation, the Fed will eventually intervene with higher rates.
How Does It Affect The Markets?
CURRENCY - It is one of the dominant indicators of consumer spending and can potentially influence interest rates. The USD will remain firm, as long as the report doesn’t stumble into an extended downswing.
STOCKS - A strong report supports stock values, whereas a weak report might undermine them.
BONDS - An unexpected jump in existing home sales could easily scare bond investors away, which could lower bond prices, and raise yields. A sudden plunge in sales might foreshadow a slowdown in economic activity, which would support higher bond prices and lower rates.
Why Investors Care
This provides a gauge of not only the demand for housing but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.