US June existing home sales came in at 4.09m, below the expected 4.20m, amid persistent affordability challenges and elevated mortgage rates.
US Existing Home Sales Decline Amid Affordability Pressures
US June existing home sales recorded a seasonally adjusted annual rate of 4.09 million, falling short of the 4.20 million forecast and marking a 1.9% decline from May's revised 4.17 million. The data underscores ongoing headwinds in the housing sector, with affordability constraints and elevated borrowing costs continuing to weigh on demand.
The National Association of Realtors (NAR) reported that single-family home sales rose 3.5% month-over-month to 3.8 million annualized, while condo and co-op sales remained flat at 370,000. Despite modest improvements in affordability, with the NAR index climbing to 105.6 from 97.5 a year earlier, the average 30-year fixed mortgage rate of 6.44% in May kept pressure on buyers. Inventory levels increased 3.3% to 1.55 million homes, equivalent to 4.5 months of supply, though the national median existing-home price hit a May record of $429,300, up 1.3% year-over-year.
Market Reaction and Implications
The softer-than-expected sales figure initially weighed on the US dollar, with the DXY index slipping 0.3% intraday. Traders interpreted the data as a sign that the Federal Reserve's restrictive monetary policy continues to dampen housing activity, potentially delaying rate cuts. However, the marginal improvement in affordability and inventory provided a counterbalance, limiting downside momentum.
Risk sentiment remained cautious, with equity markets showing mixed reactions. The S&P 500 edged lower, while the Nasdaq Composite held steady amid tech sector resilience. Bond yields retreated slightly, with the 10-year Treasury yield falling to 4.25% from 4.30%, reflecting expectations of prolonged Fed tightening.
Forex Trading Outlook
For currency markets, the data reinforces the DXY's sensitivity to US economic indicators. A sustained downturn in housing could prompt renewed bets on Fed easing, potentially weakening the dollar against major pairs like EURUSD and GBPUSD. However, strong labor market data and sticky inflation may keep the central bank on hold, maintaining support for the greenback.
Traders will monitor upcoming July housing starts and building permits for further clues on sector momentum. Technical resistance for DXY remains at 105.00, with support near 103.50. A break below the latter could signal broader risk-off flows.
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