US New Home Sales: lower volumes, but not prices

US new home sales went above expectations, adding 1% in July, supporting the short-term risk-on momentum and further pushed the S&P500 index into the area of historical highs near 4500.

However, the longer-term chart shows that US newbuilding sales have returned to a long-term rising trend in 2021 after a spike in 2020.

The boom in the US housing market was short-lived in terms of volume, but not of prices, which continue to update highs. Presumably, this jump in prices is making people hesitate to buy new houses, the median price of which exceeded 390k in July (+18.4% y/y).

The home sales statistics once again highlighted the inflationary trends in the USA caused by supply disruptions of certain commodities. But it isn’t easy to discern a housing boom like in the 2000s. The same applies to the 40% increase in used cars due to the shortage of semiconductors. Increasing rates will tighten conditions for buyers and risk collapsing demand, but it is unlikely to reduce prices.

The FxPro Analyst Team