US: Existing Home Sales continue to slow amid worsening affordability - Nomura

Analysts at Nomura note that the US existing home sales fell 0.7% m-o-m to 5.34mn saar in July, below expectations (Nomura: 5.41mn, Consensus: 5.4mn), from 5.38mn pace in June.

Key Quotes

“The slowdown this month (the fourth consecutive m-o-m decline) was led by drops in both single-family (-0.2%) and condos/co-ops (-4.8%) sales.”

“Disappointing July existing home sales highlight worsening home affordability, especially in low-tier markets, driven in parts by slow improvement in home inventory which has been inhibited by supply-side factors.”

“GDP tracking update: Disappointing existing home sales in July suggest more drag from brokers’ commissions (part of residential fixed investment) to real GDP growth in Q3. Our tracking model suggests residential investment will remain a drag in Q3 following slowdown in Q2 and Q1. After rounding, we lowered our Q3 real GDP tracking estimate by 0.1pp to 3.0% q-o-q saar.”