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Analysts at Nomura note that US existing home sales fell 0.4% m-o-m in May to 5430k saar, below expectations (Nomura: +1.5% to 5540k, Consensus: +1.1% to 5520k), after falling 2.7% m-o-m in April.

Key Quotes

“Single-family home sales remained weak, down 0.6% m-o-m in May after falling 3.0% in April. Purchases of single-family homes dropped in all regions except for the Northeast, suggesting that the slowdown in May was broad-based.”

“The scarcity of inventories will likely remain as near-term supply constraints, especially for the entry-level segment. The total stock of homes for sale fell 6.1% y-o-y and months’ supply indicator was at 4.1 months in May, which is low compared to the historical standard.”

“While the strong labor market should continue to boost consumer demand, rising home prices driven by scarce supply may somewhat dampen demand.”

GDP tracking update: May existing home sales were weaker than expected and April sales were revised down. This suggests less brokers’ commissions in Q2, a component of residential investment. However, after rounding, our Q2 real GDP tracking estimate remains unchanged at 4.1% q-o-q saar.”