U.S. data reviewed - Nomura

Analysts at Nomura offered a review of U.S. existing homes sales that increased by 5.1% in March to an annualized 5.33mn, just above expectations (Nomura: 5.24mn, Consensus: 5.28mn), after declining by 7.3% to 5.07mn in February.

Key Quotes:

"It's possible that the weak numbers in February were a result of some snow storms in January that delayed home closings, as existing home sales are counted at contract closings. To be sure, sales in areas most affected by the inclement weather fell in February and rebounded in March, such as in the Northeast (where home sales fell by 130k and rebounded partially by 70k in March) and in the Midwest (where sales declined by 180k in February and rebounded by 110k in March).

The median home price for single-family homes increased by 5.8% y-o-y in March. Home prices have accelerated more than expected over the last year, as the limited supply of for-sale homes seems to have placed upward pressure on prices. The months’ supply of homes for sale remained low at 4.5, a reminder that a pickup in new construction is needed to replenish the housing stock.

This bodes well for new residential construction and is one of the primary reasons why we expect continued solid improvement in housing starts this year. We expect sales of existing home sales to move mostly sideways, due to the supply constraint.

Q1 GDP tracking update: The stronger-than-expected increase in existing home sales in March led us to increase our Q1 GDP tracking estimate to 0.7% from 0.6%."