 | Existing home sales declined 0.8% in April to an annual rate of 5.05 million units |
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Implications: A 0.8% drop in existing home sales during April shows that housing is still struggling. And even though the median price of an existing home rose to $163,700, prices are still down 5% in the past year. Amidst this struggle, there are many positive fundamentals that could help form the bottom of the market – higher wages, better job growth, low interest rates, and great prices. Nonetheless, credit conditions remain very tight. So, while we expect the sales of existing homes to climb back to their long-term trend of about 5.5 million units annually, the process will be slow and volatile. In other news this morning, the Philadelphia Fed index, a measure of manufacturing activity in that region, fell to +3.4 in May from +18.5 in April. The consensus had expected a slight increase to +20.0. Manufacturing is still growing but not as fast as earlier this spring. We expect this index to rebound as soon as the Japanese parts shortages end. Also this morning, new claims for unemployment insurance fell 25,000 last week to 409,000. Continuing claims for regular state benefits declined 81,000 to 3.71 million. We expect claims to generally decline over the next several weeks as issues due to early auto plant shutdowns related to the disaster in Japan and the brutal tornado season pass.
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