Exchange traded funds following the homebuilding sector have declined this week as worries over the U.S. debt limit overshadow several housing reports. On Thursday, investors will get an update on U.S. pending home sales.
In home prices, the S&P/Case-Shiller 20-City Index declined 4.5% for the month of May year-over-year, down for the second straight month, reports Linda Young for All Headline News. However, the index rose 1% from April.
“We see some seasonal improvements with May’s data. This is a seasonal period of stronger demand for houses, so monthly price increases are to be expected and were seen in 16 of the 20 cities,” stated David Blitzer, chairman of the Index Committee at S&P Indices.
“Other recent housing statistics show that single-family housing starts were up moderately in June, and are at about the same pace as a year ago,” Blitzer added. “Existing-home sales were flat in June, reportedly because of contract cancellations and tight credit.”
Blitzer also noted that the data supports a “bounce-along-the-bottom” outlook. “We might have a long way to go before we see a real recovery. Sustained increases in home prices over several months and better annual results need to be seen before we can confirm real estate market recovery,” he remarked.
New home sales fell 1% to a 312,000 annual pace in June, a three-month low, report Bob Willis and Shobhana Chandra for Bloomberg. May sales were downwardly revised to 315,000 from the previously projected 319,000. [Homebuilder ETFs Await Housing Data, Earnings.]
“You’re still dealing with a supply-demand imbalance that suggests home prices will remain under pressure,” commented Tom Porcelli, chief U.S. economist at RBC Capital Markets Corp., in the Bloomberg reported.
According to the Fed’s latest Beige Book report, the country’s 12 Federal Reserve Districts revealed that home prices were either flat or falling during the last six weeks, reports Kara Johnson for Mortgage Loan.
“In forecasting the future direction of home prices, the two main factors we continue to consider are housing demand and the pace of foreclosure release,” Deutsche Bank said in a note this week. “Housing demand will depend primarily on the pace of economic recovery and job growth”
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Max Chen contributed to this article.