U.S. Existing Home Sales (June)

Sales of previously resided in homes in the U.S. beat expectations again. U.S. existing home sales jumped 3.2% in June to 5.49 mln units annualized, although this comes after a downwardly revised May of 5.32 mln units. But no matter, the June sales result (bolstered by all four corners of the country) is the highest since February 2007, and is just shy of 10% above year-ago levels. (Plus, it is the fourth month in a row above the 5 mln unit mark.) Buyers stepped up to the plate and put a bid on single-family homes (+2.8%) as well as condos (+6.6%). More current homeowners, perhaps enticed by anecdotal reports of bidding wars starting up again and the beckoning of higher prices (the median sales price rose 6½% y/y), stuck a "FOR SALE" sign in the front lawn, inventories of single family homes for sale rose for the 4th straight month (+1.0%), and total existing homes were up 0.9%. This, along with the current rate of sales, pulled the months' supply down a notch to 5.0 (total single family homes were 5.1), below the average 6.5 since the decade began, says BMO Economics.

Now for the not-so-great news:  The % of sales by first-timers slipped to 30% after reaching 32% in May (which was the highest in nearly three years). In a health market, this share should be in the 40%-to-45% range. But at least there is lots of support from those who say 'this is not my first rodeo'. Repeat homebuyers made up 58% of total sales, the highest share since August 2014.

So what's happening? Higher prices may be enticing sellers, but they're also enticing buyers who have a 'vision' that prices will continue to climb, and that higher borrowing costs are coming. But more expensive properties may be pushing some of these first-timers to the side.

The Bottom Line: Job growth and credit availability will continue to underpin support for the U.S. housing market.