Existing Home Sales Expected to Rebound

Existing home sales for May are due out at 10 EST, with expectations of increase to a 5.25 million annual rate versus the April level of 5.04 million, according to Bloomberg, with estimates ranging from 5.15 million to 5.35 million. Existing home sales show the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes account for a larger share of the market than new homes and are a leading indicator of housing market trends. Existing home sales have been lagging new home sales recently, with existing home sales declining 3.3 percent in April. The pullback in April was unexpected, as stronger underlying economic conditions, including jobs and income data, failed to spur existing home sales. Despite the monthly decline in April, sales have increased year–over–year for seven consecutive months and are still 6.1 percent above levels from a year ago. Pending home sales, a forward-looking indicator based on contract signings, rose in April for the fourth straight month and reached their highest level in nine years, according to the National Association of Realtors.Lawrence Yun, National Association of Realtors chief economist, says the steady gains in contract activity each month this year highlight the fact that buyer demand is strong."The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers — especially first-time buyers — are able to obtain a mortgage."