Bottom Line: Existing home sales rose slightly in May, countering expectations for a modest further decline. Sales continue to offer the potential for a bottom off the lows since January. That said, single-family sales were slightly lower in May. Inventories remain low as existing homeowners enjoy mortgage rates that are nearly half the prevailing current rate and have little incentive to move. Prices were also higher for the third month after declining for seven consecutive months.
Overall, housing remains in the process of bottoming with solid underlying demand despite lower affordability with higher mortgage rates. However, new home activity will likely bounce more quickly than existing home sales, where the market will continue to see low supply. |