Steen Jakobsen
The Bank of Japan has abandoned quantitative easing and the European Central Bank may taper its bond-buying programme, so what is the role of central banks in 2017, asks Saxo Bank’s chief economist Steen Jakobsen.
Article / 22 June 2016 at 5:01 GMT

3 Numbers: Existing US home sales expected to hit nine-year high

editor/analyst /
United States
  • US housing prices should post another solid gain in today’s April update
  • Eurozone consumer confidence should weaken in June after two monthly gains
  • The upbeat mood in Germany is unlikely to be reflected in the wider Eurozone
  • US existing home sales for May should hit their highest level since 2007

By James Picerno

It's Brexit vote eve, but the main events for scheduled economic reports lie outside the UK. In particular, the US housing market is in focus today, starting with the government’s monthly update on prices through April. Later, the National Association of Realtors publishes new figures on existing home sales in May. Along the way, don’t overlook June’s flash estimate of the Consumer Confidence Indicator for the Eurozone.

US: House Price Index (1300 GMT) Recent housing data points to a shortage of supply. The monthly supply of houses for sale fell to just 4.7 million units (seasonally adjusted) in April—the lowest in over a year and not all that far from a record low.

Recovery hits home ... Despite inventory shortages and rising prices, US existing home sales have sustained their recent upward momentum. Photo: iStock

Does a shrinking supply translate into rising prices? Economic theory says it does and real-world data doesn't disagree. Indeed, the government’s estimate of house prices has been creeping higher in recent years. The Federal Housing Finance Agency's House Price Index (HPI) advanced 6.1% for the year through March. That’s near the highest year-over-year gain for the last two years.

Meantime, the monthly changes have been accelerating this year. HPI increased 0.7% in March—the third straight improvement and the strongest advance since last September.

“America has experienced a dramatic drop in inventory over the past four years, with starter and trade-up homes taking the biggest hit,” noted the chief economist at Trulia, a housing data firm. As a result, “decreased inventory continues to take a toll on the affordability of all home segments".

More of the same is expected for today’s April price update. The monthly change is on track to tick lower, advancing 0.6%, according to’s consensus prediction. But that’s still a robust pace. If it holds, we’ll have more evidence for thinking that dwindling supply is propping up prices.


Eurozone: Consumer Confidence Indicator (1400 GMT) Economic expectations for Germany among financial analysts rose sharply in yesterday’s monthly report from ZEW, a research group. The new data point for current conditions increased too, but mildly so. Nonetheless, the bounce surprised the crowd—economists were expecting a slight decline on both counts, in part because Brexit worries are said to be weighing on the economic outlook across Europe. ZEW’s survey data, however, tells a different story.

“The improvement of economic sentiment indicates that the financial market experts have confidence in the resilience of the German economy,” said ZEW’s president. He noted, however, that “general economic conditions remain challenging. Apart from the weak global economic dynamics, it is mainly the EU referendum in Great Britain which causes uncertainty."

Is the upbeat news about the mood in Germany a sign that today’s consumer sentiment data for the Eurozone will advance too? The numbers are mixed on this front. Note that ZEW’s Eurozone sentiment data for June ticked lower, although the expectations figures posted a solid gain.

Today’s focus shifts to the mood in Europe’s consumer sector. Sentiment has been rebounding on this front in recent months. In the May report, the European Commission’s Consumer Confidence Index jumped to negative 7—the second month of improvement and the highest value since January.

But the revival is set to turn softer this month, according to’s consensus forecast. CCI is projected to ease to negative 7.3—the first dip since March. That’s not terrible, but if the prediction is accurate it will serve as a reminder that it’s premature to dismiss the macro uncertainty that’s linked to Brexit and slow growth.

US: Existing Home Sales (1400 GMT) Falling inventories of homes on the market may be driving up prices, but there’s no sign of headwinds in the numbers of transactions for existing houses.

“Despite ongoing inventory shortages and faster price growth, existing-home sales sustained their recent momentum and moved higher for the second consecutive month” in April, the National Association of Realtors reported last month.

Economists see another round of improvement for the May figures due out today.’s consensus view sees existing sales rising to 5.50 million units (seasonally adjusted annual rate). In that case, sales are set to touch a nine-year high.

It doesn’t hurt that mortgage rates remain close to historical lows. Granted, there are any number of other issues that could create trouble for the housing sector in the months ahead. The surprisingly weak employment report in May is one example. But judging by the forecasts, analysts are looking for today’s sales numbers to remain firmly in the bullish column.

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– Edited by Robert Ryan

James Picerno is a macro analyst/editor at Follow James or post your comment below to engage with Saxo Bank's social trading platform.


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