Housing Market Stalled

Dan North
Dan North Chief Economist North America

The US housing market continues to stumble. Existing home sales fell -1.7% m/m in June to a -2.2% y/y rate. While new home sales rose +7.0% m/m, it was well short of expectations after falling -8.2% m/m in May and -5.1% in April. The new home sales data is volatile, so a three-month moving average gives a clearer picture, and it is distinctly down at only +0.6% y/y. Prices for both existing and new homes rose in June to +4.3% y/y and 0.0% y/y, respectively. And prices are part of the problem; since the recession, prices of existing homes have risen 57% and those of new homes have risen 45%, yet wages have only gained 26%, making housing unaffordable for many. Weak housing activity also showed in starts and permits, which both fell in June. Congress and the President reached an agreement on a budget and an increase in the debt ceiling. The agreement removes one of the uncertainties hanging over the economy, although a government shutdown remains possible if the Treasury runs out of cash in September.