Overview: This week's economic releases—relook at the consumer

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Part 5
Overview: This week's economic releases—relook at the consumer PART 5 OF 11

Why did home sales in 2013 overshadow this year’s numbers?

National Association of Realtors: Existing Home Sales report for May

The National Association of Realtors (or NAR) will release the Existing Home Sales figures for May on Monday, June 23.

What are existing home sales?

Existing home sales are a monthly release, issued by the NAR. Total existing home sales represent completed transactions that include single-family homes, townhomes, condominiums, and co-ops.

Part 5

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Key takeaways from the April release

Aided by a post-winter bump, existing home sales increased 1.3% month-over-month (or MoM) to 4.65 million units in April, 2014, on a Seasonally-Adjusted Annual Rate (or SAAR) basis.

However, home sales in 2014 are less than sales in 2013. April sales were down 6.8% on a year-over-year (YoY) basis—their sixth consecutive monthly fall compared to 2013. Home sales are down 6.6% in the first four months of 2014, compared to the similar period in 2013.

Poor winter weather may have played a role in the lower sales figures for 1Q14. Lower home inventories, higher mortgage rates, and higher home prices are other key factors affecting home sales in 2014. Analysts are already expecting lower sales for 2014 compared to last year, due to the unusually cold winter.

Investor impact

Home sales in the coming months will be watched closely by both stock (VOO) and bond (AGG) market participants. Home sales are a big-ticket consumption item. An increase housing market activity is often associated with increased consumption in the overall economy.

Popular ETFs investing in domestic home construction companies include the iShares U.S. Home Construction ETF (ITB) which tracks the performance of the Dow Jones U.S. Select Home Construction Index. Another ETF is the State Street SPDR Homebuilders ETF (XHB). Top ten holdings in both ETFs include domestic homebuilder, Lennar (LEN).

In the following section, we’ll preview the New Home Sales report which will be released this week. Please continue reading the next section of this series.


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