U.S existing home sales surge to the highest level in almost two years in December

The National Association of Realtors announced the monthly U.S existing home sales data on Wednesday. Printing the best in almost two years in December, the data suggested recovery in the housing market following 2018’s period of weakness. As per the analysts, the gain in the U.S home sales was largely attributed to the lower mortgage rates.

In terms of figures, U.S home sales hiked by 3.6% in December. At 5.54 million units (seasonally adjusted annual rate) last month, the data was reported to be the strongest since February 2018. The revised data for November recorded 5.35 million units in the previous month.

Analysts Were Expecting U.S Home Sales To Expand By 1.3% In December

In a previous estimate, economists had anticipated the U.S home sales to grow at a rate of 1.3% in December and register 5.43 million units last month. The report further accentuated on Wednesday that populous South, West, and Northeast saw a sharp increase in home sales while Midwest failed to follow the aforementioned regions in their steps.

On a year over year basis, existing home sales noted a 10% increase in the United States in December. Existing home sales, according to the experts, contribute to 90% of the total home sales in the U.S. At 5.34 million units, the full-year sales data, on the other hand, remained unchanged. Wednesday’s report echoed the government data released in the past week that posted U.S homebuilding to have hiked to a 13-year high in December.

As per Freddie Mac (mortgage finance agency), the three consecutive rate cuts by the U.S Federal Reserve in 2019 have pushed the average 30-year fixed mortgage rate down to 3.65% versus November 2018’s high of 4.94%. Growth in this sector, however, is still somewhat limited due to a shortage of homes, specifically in the lower-price bracket of the U.S housing market. Such a shortage, as per the experts, is associated with the lack of required land and labor.

U.S Housing Market Accounts For 3.1% Of Its GDP

Housing market currently accounts for 3.1% of the U.S gross domestic product (GDP). As per December’s report, the U.S market only had 1.40 million homes that were previously owned that marked a record low for the housing market. The figure was recorded 14.6% higher in November and 8.5% higher in the same month last year. House prices gained 4.8% in the last year while median existing home price surged 7.8% in December as compared to 2018.

The forex market didn’t respond aggressively to Wednesday’s economic data with EUR/USD trading within 20 pips under the 1.11 level after the release of the U.S existing home sales report.