Instant view: Existing home sales down 5.1 pct in June

NEW YORK (BestGrowthStock) – U.S. existing home sales fell less sharply than expected in June, but the supply of unsold homes rose to the highest in almost a year, an industry group said on Thursday.

KEY POINTS: * Sales fell 5.1 percent to an annual unit rate of 5.37 million units, the National Association of Realtors said. Economists polled by Reuters had expected an 8.1 percent decline to a 5.18 million pace in June. * There were about 3.99 million homes for sale at the end of June, a level that would take about 8.9 months to deplete at the current sales pace. That’s the highest monthly supply since August 2009.

COMMENTS:

GUS FAUCHER, DIRECTOR OF MACROECONOMICS, MOODY’S ANALYTICS,

WEST CHESTER, PENNSYLVANIA:

“Obviously there is a payback from the tax credits. The low mortgage rates are leading to a further recovery in housing, which is good for future growth in the economy.

“I think the fundamentals in housing are improving. The affordability is very high with the low mortgage rates and low home prices. We will see some improvement in the housing market into 2011 even if prices continue to fall because we are still working through excess inventory.

“I think housing is going to be a slight positive for GDP growth, going from a drag to a neutral for the rest of the year and into 2011 and 2012.”

JAMES KOCHAN, CHIEF FIXED-INCOME STRATEGIST, WELLS FARGO ADVANTAGE FUNDS, MILWAUKEE, WISCONSIN:

“In most parts of the country home prices are leveling off or maybe improving a little, but if you travel to southern California or Atlanta or Florida and if you say that, they think you’re nuts. That’s the pattern we’ll see in the United States for the next several years. It will take a long time for some of these areas to recover. In some areas such as Texas or the Northeast or northern California, home prices are recovering. In the Midwest, they’re recovering, but very very slowly. We’re getting a little bit of a selloff in Treasuries because stocks are bouncing here. That’s why bonds are down.”

MARKET REACTION: STOCKS: U.S. stock indexes rose. BONDS: U.S. Treasury debt prices were lower. DOLLAR: U.S. dollar rose against the yen.

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Instant view: Existing home sales down 5.1 pct in June