Don’t fret about June’s weak sales figures

Home sales fell by 5.6% m/m in June, the largest monthly decline for 16 months. But this is unlikely to signal that the recovery in housing demand has run out of steam already. For one, pending home sales are still running at a level that looks consistent with renewed growth in existing home sales. What’s more, the pick-up in outstanding orders at major public homebuilders in the second quarter points to future gains in new home sales. In any case, given that the number of homes for sale also fell in June, and has declined by 23.8% over the past year, the overall balance between demand and supply still looks consistent with year-on-year growth in house prices.