US Existing Home Sales Preview: Reflection of long-term employment prospects

Sales of existing homes, the largest category in the US market, are expected to recover after plunging to their lowest level since the collapse of the housing bubble a decade ago but markets are unlikely to be affected by the numbers, FXStreet’s analyst Joseph Trevisani reports.

Key quotes

“Purchases of previously occupied homes are forecast to jump 24.5% in June to a 4.8 million annual rate following May’s 3.91 million as the lowest montages rates in history have encouraged buyers despite 11.1% unemployment and the uncertain economy.”

“The ability to qualify for a mortgage and confidence to try depend, more than anything else on long-term employment prospects. That sanguine labor market of the three years prior to February, which saw the highest rate of home sales in 13 years, is gone, replaced by mass unemployment among those would in most cases not be buying a home and endemic worry among the employed who might. The housing market will not return to normal until the first group is back at work and the second is secure in their jobs.”

“Markets have not historically treated the US housing market as an indicator or trading event and even if the downside risk to the June number is realized it will be old news. The weakening dollar performance over the past few weeks has been the final retreat of the pandemic risk premium aided in the case of the euro and sterling by prospects of a euro zone economic relief package. No result from the US home market will change those views.”