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Third consecutive monthly rise in U.S. existing home sales

wgraham

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RBC ECONOMICS RESEARCH - DAILY ECONOMIC UPDATE - July 23, 2009 Third consecutive monthly rise in U.S. existing home sales

U.S. existing home sales rose 3.6% in June to 4.89 million annualized units. Expectations were for a more muted rise of 1.5% to 4.84 million. Units sold in May totalled 4.72 million (revised from the initially reported 4.77 million units). Months’ supply of unsold homes declined to 9.4 following May’s 9.8 (revised from 9.6) reading.

The rise in June marks the third consecutive monthly increase in the number of sales and points to the market making headway since January’s low of 4.49 million units sold. Sales rose for both single-family homes and condos. The more volatile condos category was up 14% in the month, while single-family home sales rose 2.4%.

Inventories of unsold homes, as measured by months’ supply, declined to 9.4 from May’s reading of 9.8 (revised from 9.6). The reading is considerably lower than the all-time high of 11.3 recorded in March of last year. The improvement spanned both condos and single-family homes. Months’ supply of single-family homes fell to 8.9 from 9.1, while condo declined to 13.4 from May’s 15.6 reading. In terms of the absolute amount of unsold inventory, June’s reported 3.82 million units represented a decline from May’s 3.85 million.

The housing market has made measured progress during the past few months toward stabilization. In addition to today’s reported rise in sales of existing homes and declining inventories, housing starts posted a 3.6% rise in June. During his testimony before the Senate yesterday, Fed Chairman Bernanke remarked that he is seeing positive signs in housing markets. Although these signs of stabilization are certainly welcome, the housing market remains at depressed levels. We, therefore, expect the Fed to keep Fed funds at the historically low 0.00%-0.25% range until the fourth quarter of next year.

Jobless claims
- In another report released earlier this morning, initial jobless claims for the week of July 18 rose to 554,000. Although slightly below expectations of a 557,000 reading, this did represent a jump compared to the prior week’s reading of 524,000 (revised from 522,000). However, we are cautious about interpreting jobless claims over July because the GM and Chrysler bankruptcies have led to atypical plant shutdown schedules compared to their past seasonal norms, potentially distorting the seasonal adjustment procedure.
 
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