Economy Watch: Existing Home Sales Up in June
- Jul 23, 2014
The National Association of Realtors reported on Tuesday that total existing-home sales rose in June by 2.6 percent month-over-month to an annualized rate of 5.04 million units, compared with 4.91 units million in May. Sales are at their highest pace since October 2013 (when the rate was 5.13 million units), but remain 2.3 percent below the 5.16 million-unit pace in June 2013.
NAR chief economist Lawrence Yun notes wage growth is holding back what should be a stronger pace of sales. “Hiring has been a bright spot in the economy this year, adding an average of 230,000 jobs each month,” he explains. “However, the lack of wage increases is leaving a large pool of potential homebuyers on the sidelines who otherwise would be taking advantage of low interest rates. Income growth below price appreciation will hurt affordability.”
Inventories were up as well, according to the Realtors. Total U.S. housing inventory rose by 2.2 percent in June to 2.3 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace. Unsold inventory is 6.5 percent higher than a year ago, when there were 2.16 million existing homes available for sale.
Inflation still subdued
Inflation experienced another mild uptick in June, with the Consumer Price Index for All Urban Consumers increasing 0.3 percent for the month, according to the Bureau of Labor Statistics on Tuesday. Last month, the increase was 0.4 percent. Over the last 12 months, the all items index increased 2.1 percent, or roughly the Federal Reserve’s target for inflation of 2 percent.
Unlike last month’s increase, which was broad-based, the June increase was mostly driven by increases in the price of energy—gasoline in particular. The price index for gas was up 3.3 percent for the month, and accounted for about two-thirds of the overall increase. Energy as a whole was up 1.6 percent for the month; food barely budged, increasing 0.1 percent in June.
Energy has been up 3.2 percent for the year, and food up 2.3 percent. Take energy and food out of the calculations—the so-called core rate of inflation—and the overall increase for June was 0.1 percent, following a 0.3 percent increase in May. Since last year, the core rate of inflation has increased 1.9 percent.
Investors are less worried about events in other parts of the world for now, it seems. Wall Street had an up day on Tuesday, with the Dow Jones Industrial Average gaining 61.81 points, or 0.36 percent. The S&P 500 advanced 0.5 percent and the Nasdaq was up 0.71 percent.