At 10:00 a.m., we’ll get the June reading of pending home sales.
Economists are looking for a 1.0% month-over-month decline.
Of course, some economist expect worse, and some expect better.
“Pending home sales should have decreased by 2.0% mum in June,” warned Bank of America Merrill Lynch’s Michelle Meyer. “We expect some of the decline in signed contracts for existing homes to be a give-back following a 6.7% surge in May. We could also start to see the impact of rising mortgage rates, which may have deterred some homebuyers, particularly investors and second home buyers. The rise in rates is likely to create volatility over the coming months, but overall we believe the housing market can withstand the rise in rates and sales will continue to head higher.”
So, Meyer sees some give-back and the beginning of the unfavorable impact of rising interest rates.
“The pending home sales index (PHSI), based on initial existing home sales contracts, probably rose again in June,” said UBS’s Kevin Cummins who’s looking for a 1.0% gain. “New home sales, which also reflect initial contracts, were reported up 8.3% in June. The new home sales data are notoriously volatile, but the latest homebuilder survey also suggested further strengthening in sales.”
So, Cummins is relying on the other coincident indicators, which signal continued up moves.
Regardless, today’s report will be closely watched to see how rising rates are impacting one of the most encouraging economic stories in the world.
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