US Home Sales and GDP tracking update - Nomura

Analysts at Nomura noted the data from the US session and offered their GDP tracking update.

Key Quotes:

"New home sales: July new home sales fell 9.4% m-o-m to an annualized pace of 571k, below expectations (Nomura and Consensus: no change at 610k). However, sales for the three previous months (June, May, and April) were all revised upwards notably. Recall that new home sales tend to be highly volatile due to a relatively small sample. July sales lowered the current sales pace very slightly. The three-month moving average in July, at 606k, was about 1.1% lower than the average pace in Q2 (613k). We expect modest growth in new home sales to continue in Q3.

Besides supply constraints that have been weighing on new home sales, fast rising prices pose looming challenges to demand. Strong job markets and demographic factors remain favorable for consumer demand, but worsening affordability may adversely affect the demand. Low inventories stemming from shortages of skilled labor and of developable lots could be a persistent problem as it would take a significant amount of time for supply levels to adjust. Read our full report: Despite Weak Reading, New Home Sales Remain on Pace, First insights, 23 August 2017. 

GDP tracking update: While new home sales were slightly weaker than we expected, implying less brokers’ commissions in Q3, after rounding, our estimate Q3 GDP growth remains unchanged at 2.9% q-o-q saar. More information on residential investment from July’s existing home sales data will be released tomorrow."