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Home Sales Fall

Economic Observer: Up-to-date information on the latest financial news

Overview: With little major economic news, it was a relatively quiet week for mortgage markets. The most significant data came from the housing sector, and its market impact was minor. Mortgage rates ended the week slightly higher.

 

In May, sales of existing homes, which make up about 85% of the market, fell slightly from April, in line with the consensus forecast from economists. Inventory levels stand at just a 3.7-month supply nationally, well below the 6-month supply that is typical in a balanced market. However, current inventory levels are 19% higher than last year at this time. The median existing-home price of $419,300 was up 6% from a year ago and a record high.

 

The latest results were not as good for the segment containing newly constructed homes. New-home sales, which account for the remaining 15% of the market, unexpectedly plunged 11% from April to May and reached the lowest level since November. These figures are highly volatile from month to month, however, and the results for April were revised significantly higher, partly offsetting the weakness in May. While existing-home sales measure actual closings during the month, new-home sales are based on contracts signed, making them a leading indicator of future housing market activity. 

 

The shortage of homes available for sale in many parts of the country persists, so additional supply continues to be sorely needed overall, yet the data released this week was disappointing. In May, single-family housing starts unexpectedly dropped 5% from April. Single-family building permits, a leading indicator of future construction, similarly declined more than forecasted. In addition, a survey of home builder sentiment on housing market conditions from the National Association of Home Builders (NAHB) dropped for the first time since December.



 

Existing-Home Sales (millions)

Existing Home Sales in millions from September 2023 to May 2024

 

Week Ahead


June 28

Personal Income and Outlays

Personal Consumption Expenditures (PCE) Price Index


July 1

Institute for Supply Management (ISM) Manufacturing Index


July 4

Mortgage markets closed for Independence Day


July 5

Institute for Supply Management (ISM) Services Index

Employment Report


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