US existing home sales fell in September

Housing is one of the sectors that recedes with a slowdown and booms with economic growth. It only represents 5% of the GNP (gross national product). However, it accounts for about 27% of investments. According to U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new home sales fell to 468,000 in September—compared to a downward revised 529,000 in August 2015. It’s below the consensus estimate of 549,000. The iShares US Real Estate (IYR) fell by -0.01% as of October 26. IYR has lost 1.3% YTD (year-to-date).

New Home Sales Fell Due to the Price Hike in September

New home sales rose 2.0% on an annual basis

On a monthly basis, new home sales fell 11.5% in September 2015. They rose a mere 2.0% above the September 2014 reading of 459,000. Residential REITs like AvalonBay Communities (AVB), Equity Residential (EQR), Essex Property Trust (ESS), and Apartment Investment and Management (AIV) rose 8.8%, 13.5%, 6.9%, and 11.4% over the past month as of October 26.

New home prices rose 13.5% from a year ago

New houses sold at a median price of $296,900 in September 2015. This was a rise of 13.5% from a year ago. The prices rose 2.6% in September. The fall in the demand and the rise in the supply of new homes led to a rise in the stock of new houses for sale. At the end of September, it was 225,000 compared to 216,000 in August. This represents the supply of 5.8 months at the current sales rate compared to 4.9 in August 2015.

With rising home prices, new home sales fell. Even the mortgage rate cut hasn’t attracted potential customers towards home buying. It also implies that consumers are cautious about their spending considering global volatility.

Along with US housing, Germany’s business climate data was released. In the next part, we’ll look at how Germany’s business climate is trending.

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