The NAR is scheduled to report July existing home sales tomorrow and the Bloomberg consensus is expecting 5.15 million units up 1.4% from June.
Yet, according to my friend, Christophe Barraud, Chief Economist and Strategist at Market Securities and also the best forecaster of US statistics since November 2012, existing home sales should rise sharply in July:
According to my estimate, in order for the sales in adjusted value to be stable from June to July, that is to say around 5 080 K – raw data should rise 16.2% from July 2012 to July 2013. Nevertheless, local data that I gathered show a rise of 20.8%. Indeed, even if existing home rose slightly in some regions like Las Vegas (1.2%), they increased significantly in some areas such as North Texas (28.0%). Finally, we get a seasonally adjusted statistics of 5 280 K which represents a 3.9% rise MoM.
This rebound in existing home sales was due to several factors:
1/ Inventories’ rebound: With the significant increase in prices, more and more households are no longer in a situation of “negative equity” and now want to sell their property.
2/ The recent rise in mortgage rates led buyers enjoying a rate-lock period of the borrowing rate to exercise their options.
This forecast is coherent with articles which show that sales rose YoY in some regions and therefore were far above the +16.2% threshold needed to stabilize sales in July:
- Clark County (+39.3% YoY)
- California (+21.8% YoY – the highest figure for a July since 2005)
- South Carolina (+23.6% YoY)
- Triangle (+34.3% YoY)