Existing Home Sales Fall As Buyers Seek Clarity On Interest Rates

Key Insights

• Existing Home Sales decreased by 3.4% month-over-month in April. 
• Home sales continue to bounce back and forth as mortgage rates fluctuate. 
• SP500 moves higher as traders hope that debt ceiling negotiations will be successful. 

Existing Home Sales Missed Analyst Expectations

On May 18, the National Association of Realtors reported that Existing Home Sales declined by 3.4% month-over-month in April, compared to analyst consensus of -1%. The median existing-home sales price decreased by 1.7% from one year ago to $388,800.

NAR Chief Econmist Lawrence Yun commented:  “The combination of job gains, limited inventory and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand.”

It will be interesting to see how Fed policy outlook impacts the housing market in the upcoming months. Markets expect that Fed will start cutting interest rates in the second half of the year, which will put pressure on mortgage rates. At the same time, Fed speakers highlight the importance of the fight against inflation and say that cutting rates too early is very risky. The potential homebuyers may prefer a wait-and-see approach in this situation, which will lead to lower home sales.

SP500 Tests New Highs

SP500 moved higher after the release of the Existing Home Sales data. Traders bet that lower home sales will serve as an additional catalyst for rate cuts in the second half of the year, which will be bullish for stocks.

Gold remains under serious pressure as traders focus on rising Treasury yields. The housing data did not have a material impact on gold market dynamics as Treausury market dynamics and debt ceiling negotiations remain the key catalysts for gold.

U.S. Dollar Index tested new highs above the 103.40 level. Higher Treasury yields served as the key catalyst behind the recent rally.

For a look at all of today’s economic events, check out our economic calendar.