US Home Sales Drop in August

U.S. home resales unexpectedly fell in August as investors stepped away from the market, but the decline probably does not signal renewed weakness.

The National Association of Realtors said on Monday existing home sales dropped 1.8 percent to an annual rate of 5.05 million units. The decrease was the first in four months, although the sales pace was still the second highest for the year.

“There is no fundamental economic weakness story in the fall. Maybe investors are leaving the market because home prices are too high and (there are) no more bargains to be had,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.

 
Economists had forecast sales increasing to a 5.20 million-unit pace. Compared to August last year, sales were down 5.3 percent.

Investors had propped up the market by snapping up distressed properties and converting them into rental units. But last month they accounted for only 12 percent of transactions, which was the smallest share since November 2009.

Although first-time buyers did not step up in August, the retreat by investors means fewer bidding wars and increased opportunities for ordinary buyers that could support sales going forward. In addition, a strengthening labor market is likely to culminate in faster wage growth, bolstering potential buyers.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza