US: Pending home sales declined 0.7% m-o-m in July - Nomura

Analysts at Nomura note that the US pending home sales declined 0.7% m-o-m in July, below expectations (Consensus: +0.3%).

Key Quotes

“The fall was driven by a 1.7% decrease in the South and 0.9% drop in the West, partly offset by increases in the Northeast (1.0%) and Midwest (0.3%). On a 12-month basis, pending home sales are down 0.5%.”

“The July decline in pending home sales, representing upstream contract signings, portends soft readings on existing home sales (contract closings) in future months.”

“Structural issues in the housing market, including low inventory and worsening affordability despite strong demand, continue to weigh on sales activities for existing homes.”

“GDP tracking update: Inventory accumulation was revised up slightly more than expected in the second estimate of Q2 GDP growth, implying slightly less inventory investment in Q3. However, July’s decline in pending home sales was somewhat less than we had expected, implying more residential investment in Q3. Taken altogether, after rounding, our Q3 GDP tracking estimate is unchanged at 3.1% q-o-q saar.”