Investing.com – U.S. existing home sales fell more than expected in July, dampening optimism over the health of the housing market, according to a report released on Wednesday by the National Association of Realtors (NAR).
The industry data showed that home resales decreased 3.2% in July to a seasonally adjusted 5.39 million units from the 5.57 million units in June.
The consensus forecast was for a 0.4% decline to 5.51 million units.
The data helps to gauge the strength of the U.S. housing market and is considered to be a key indicator of overall economic strength.
Lawrence Yun, NAR chief economist, pointed out that existing sales fell off track in July after steadily climbing the last four months.
“Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,” he said.
Yun noted that realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.
“Although home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong spring, the housing market is undershooting its full potential because of inadequate existing inventory combined with new home construction failing to catch up with underlying demand,” he warned.
“As a result, sales in all regions are now flat or below a year ago and price growth isn’t slowing to a healthier and sustainable pace,” Yun concluded.
After the report, EUR/USD was trading at 1.1262 from around 1.1267 ahead of the release of the data, GBP/USD was at 1.3257 from 1.3256 earlier, while USD/JPY traded at 100.44 compared to 100.39 before the release.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 94.72, compared to 94.66 ahead of the report.
Meanwhile, U.S. stock markets were slightly lower after the open. The Dow Jones Industrial Average fell 24 points, or 0.14%, the S&P 500 slipped 2 points, or 0.11%, while the Nasdaq Composite inched down 1 point, or 0.03%.
Elsewhere, in the commodities market, gold futures traded at $1,331.95 a troy ounce, compared to $1,332.15 ahead of the data, while U.S. crude oil traded at $47.56 a barrel from $47.62 earlier.