Data released on Thursday in the US showed Existing home sales rose 1.4% during June, reaching a 5.86 million-unit pace annual rate. According to analysts at Wells Fargo, the increase in inventory leaves room for an upturn in home sales. 

Key Quotes: 

“Existing home sales increased 1.4% during June to a 5.86 million-unit pace, ending a four-month streak of declines. The turnaround is a reminder that, while home buying activity has cooled off this year alongside shrinking inventories and skyrocketing prices, underlying demand for homes remains strong.”

“A recent jump in pending home sales presaged June’s improvement in existing sales. After declining 4.4% in April, pending home sales, which lead closings by a month or two, jumped 8.0% in May. Looking ahead, we expect housing market activity to remain strong, although some moderation may be in the cards. Mortgage applications for purchase have recently fallen back towards their pre-pandemic trend over the past few weeks. Overall mortgage applications fell 4.0% during the week ending July 16, with purchase applications sinking 6.4%. The slip in applications suggests that homes sales may slow down this summer.”

“Home sales appear poised to strengthen in the second half of the year as the housing market moves back into balance. The supply picture should continue to improve as higher prices bring out more sellers. Moreover, mortgage rates are likely to remain low, which should help offset higher prices and reinforce strong demand from an incoming cohort of Millennial entry-level buyers.”