US: Existing home sales for February were weaker than expected - Nomura

Analysts at Nomura note that the US existing home sales declined 3.7% m-o-m in February to an annual rate of 5.48mn (Nomura: -1.8%, Consensus: -2.5%) as the months supply increased to 3.8 from 3.5 (implying that it would now take 3.8 months to work off the inventories), but the improvement in this indicator may be due to a decline in sales.

Key Quotes

“Low supply in the affordable price range still remains a challenge. National Association of Realtors (NAR) reports that the slowdown in existing home sales is likely due to too few properties for sale and weakening affordability conditions which stifled buyers in many regions. The median existing-home price in February was $228k, up 7.7% from February 2016 ($212k), the fastest pace since last January (8.1%). However, demand appears to remain strong. NAR states, “Realtors are reporting stronger foot traffic from a year ago,” and “Newly listed properties are being snatched up quickly so far this year.”

“Q1 GDP tracking update: Existing home sales for February were weaker than expected, suggesting less brokers' commissions. This is slightly negative to residential investment of Q1 GDP. While the impact was small, after rounding, our GDP tracking estimate was lowered by 0.1pp to 1.2% from 1.3%.”