Existing Home Sales - 6-20-13

TRADEX GLOBAL INTERNAL COMMENTARY

Sales of existing homes increased 4.2% in April to an annualized rate of 5.18 million, compared to the previous annual rate of 4.97 million. With home prices rising and mortgage rates still close to historic lows this is a welcome and confirming sign for the economy.  This is good news for our RMBS traders, the faster sales and higher prices will also increase the value of non-agency bonds, as loss severities are improving and more cash is coming in than was modeled when the security was purchased. The housing improvement is filtering down to consumers feeling wealthier and retail sales are growing (the wealth effect) and confidence is building in most sectors. The good news also brings realization that the Fed will not print money forever and the markets today are more focused on that than the better than expected numbers in housing. Keep nimble - Michael Beattie

EXTERNAL RESEARCH COMMENTARY

Sales of previously owned U.S. homes climbed more than forecast in May to the highest level since November 2009 and prices jumped, indicating more progress for residential real estate.  Purchases (ETSLTOTL) of existing houses increased 4.2 percent to an annualized rate of 5.18 million from 4.97 million in April, the National Association of Realtors figures showed today in Washington. The median forecast in a Bloomberg survey called for a 5 million rate of sales. The median selling price surged from a year ago by the most since October 2005, the group said.  Rising home values and mortgage rates within a percentage point of all-time lows will help encourage Americans to put their properties on the market and trade up. The increase in wealth from housing is also bolstering confidence and sustaining consumer spending that will keep fueling the economy.  “The residential real-estate market in the U.S. is on fire,” said Brian Jones, senior U.S. economist in New York at Societe Generale, who projected a 5.17 million annual rate for home sales. “Ultimately, I think it’s a sign of confidence in the U.S. economy.”  Stocks maintained losses after the Federal Reserve said yesterday that it may start paring record monetary stimulus. The Standard & Poor’s 500 Index dropped 1.3 percent to 1,607.56 at 10:24 a.m. in New York.  Other figures today showed manufacturing in the Philadelphia area unexpectedly grew in June at the fastest pace in two years as factories showed resilience in the face of slowing overseas markets.

Tradex Global Advisory Services, LLC

investorrelations@thetradexgroup.com 

203-863-1500

@Tradex_Global