Existing-Home Sales Dipped 2.5% in August

Economic

Summary:

Existing-home sales retreated 2.5% in August to a seasonally adjusted annual rate of 3.86 million. Sales slid 4.2% from one year ago.

Key Highlights

Existing-home sales retreated 2.5% in August to a seasonally adjusted annual rate of 3.86 million. Sales slid 4.2% from one year ago.

The median existing-home sales price rose 3.1% from August 2023 to $416,700, the 14th consecutive month of year-over-year price increases.

The inventory of unsold existing homes improved by 0.7% from the previous month to 1.35 million at the end of August, or the equivalent of 4.2 months’ supply at the current monthly sales pace.

Existing-home sales fell in August, according to the National Association of REALTORS. Three out of four major U.S. regions posted sales declines while the Midwest registered no change. Year-over-year, sales slipped in three regions but remained stable in the Northeast.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – descended 2.5% from July to a seasonally adjusted annual rate of 3.86 million in August. Year-over-year, sales retracted 4.2% (down from 4.03 million in August 2023).

“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months,” said NAR Chief Economist Lawrence Yun. “The home-buying process, from the initial search to getting the house keys, typically takes several months.”

Total housing inventory registered at the end of August was 1.35 million units, up 0.7% from July and 22.7% from one year ago (1.1 million). Unsold inventory sits at a 4.2-month supply at the current sales pace, up from 4.1 months in July and 3.3 months in August 2023.

“The rise in inventory – and, more technically, the accompanying months’ supply – implies home buyers are in a much-improved position to find the right home and at more favorable prices,” Yun added. “However, in areas where supply remains limited, like many markets in the Northeast, sellers still appear to hold the upper hand.”

The median existing-home price for all housing types in August was $416,700, up 3.1% from one year ago ($404,200). All four U.S. regions posted price increases.

REALTORS Confidence Index

According to the monthly REALTORS® Confidence Index, properties typically remained on the market for 26 days in August, up from 24 days in July and 20 days in August 2023.

First-time buyers were responsible for 26% of sales in August – matching the all-time low last seen in November 2021 – and down from 29% in both July 2024 and August 2023. NAR’s 2023 Profile of Home Buyers and Sellers – released in November 2023 – found that the annual share of first-time buyers was 32%.

All-cash sales accounted for 26% of transactions in August, down from 27% in both July and one year ago.Individual investors or second-home buyers, who make up many cash sales, purchased 19% of homes in August, down from 13% in July 2024 and 16% in August 2023.

Distressed sales – foreclosures and short sales – represented 1% of sales in August, unchanged from last month and the previous year.

Mortgage Rates

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.2% as of September 12. That’s down from 6.35% one week ago and 7.18% one year ago.

Single-family and Condo/Co-op Sales

Single-family home sales decreased 2.8% to a seasonally adjusted annual rate of 3.48 million in August, down 3.3% from the previous year. The median existing single-family home price was $422,100 in August, up 2.9% from August 2023.

Existing condominium and co-op sales in August were identical to July at a seasonally adjusted annual rate of 380,000 units, down 11.6% from one year ago (430,000 units). The median existing condo price was $366,500 in August, up 3.5% from the prior year ($354,200).

Regional Breakdown

Existing-home sales in the Northeast in August faded 2.0% from July to an annual rate of 480,000, which was identical to August 2023. The median price in the Northeast was $503,200, up 7.7% from last year.

In the Midwest, existing-home sales were unchanged in August at an annual rate of 920,000, down 5.2% from the previous year. The median price in the Midwest was $315,400, up 3.8% from August 2023.

Existing-home sales in the South waned 3.9% from July to an annual rate of 1.73 million in August, down 6.0% from one year before. The median price in the South was $367,000, up 1.6% from one year earlier.

In the West, existing-home sales declined 2.7% in August to an annual rate of 730,000, down 1.4% from a year ago. The median price in the West was $622,500, up 2.2% from August 2023.

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Alex

Economic

Thailand need not reduce interest rates immediately after the Federal Reserve eased policy as its economic outlook remains unchanged, the chief of its central bank said on Friday, while stressing its independence amid government pressure for a cut.

Bank of Thailand (BOT) governor Sethaput Suthiwartnarueput also said reducing borrowing costs would not help the country's debt problems, pushing back at a government that contends the current policy rate is hamstringing its efforts to revive the stuttering economy.

Thailand's key interest rate has been at 2.50% for a year, a decade-high, and the BOT has resisted calls for easing in an extended stand-off with the government as it struggles to kick-start an economy that grew just 1.9% in 2023 and is forecast to expand just 2.6% this year.

"The policy is still outlook-dependent. The current outlook is still the same as forecast. Nothing has changed," Sethaput told reporters, adding an off-cycle meeting before the next rate review on Oct 16 was not necessary.

"If we focus too much on the latest information, there will be a lot of volatility. We don't want monetary policy expectations to exacerbate market volatility," he added.

Rate cuts, Sethaput said, would not help with Thailand's problem of household debt, where the ratio is close to 91% of gross domestic product, among the highest in Asia.

The issue should be addressed with a policy mix, including debt restructuring for vulnerable groups, Sethaput said.

Short-term boost, long-term problem

In remarks at a BOT symposium on Friday, Sethaput underlined the importance of central banks remaining independent.

"Central banks are designed to support the implementation of monetary policies that must give weight to long-term stability," he said.

"If central banks are not independent enough, they may lose the principle of long-term vision."

While lower interest rates could raise short-term growth, there was a trade-off with inflation and that could create vulnerabilities such as debt accumulation and speculation, he added, constraining long-term growth and risking a crisis.

The governments of Prime Minister Paetongtarn Shinawatra and predecessor Srettha Thavisin have urged a rate cut to augment their fiscal stimulus, including the imminent rollout of a flagship scheme to give 10,000 baht (US$302 or RM1,265) handouts to 45 million Thais to spur activity.

The BOT chief's remarks come just weeks after the rise to power of Paetongtarn, who earlier this year said central bank independence was an obstacle to solving economic problems.

It also comes as her ruling Pheu Thai Party nominates its loyalist Kittiratt Na Ranong, a former finance minister with a record of clashing with the central bank, to be the next BOT board chairman, as reported this week by Reuters.

The BOT board chair has no say in monetary policy, but is involved in appointments of governors and the monetary policy committee.

Sethaput also said the BOT was monitoring the baht, which has become stronger and more volatile, driven by a weaker dollar, he said, adding the baht's strength had not impacted exports much.

"We don't want the baht to be overly volatile," he added.

Source: Theedgemarkets

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Cohen

Economic

GIC Pte Ltd group chief investment officer (CIO) Jeffrey Jaensubhakij has warned that the market exuberance following Wednesday’s outsized interest-rate cut could be short-lived amid the risk of rising inflation.

“For now, we should enjoy it,” Jaensubhakij said at the Milken Institute Asia Summit 2024. “But just be prepared that you have tight labour markets across the US, Europe, Japan, and so the risk of inflation coming back sooner may be there.”

The sovereign wealth fund investor said that with a US election cycle underway, politicians could push unnecessary stimulus into the market, in an effort to win votes.

Jaensubhakij’s comments were broadly reflective of a panel that provided tips for other investors on surviving a potential downturn. He added that many of the companies GIC had backed need to borrow funds and wanted rates to drop further.

“In some ways, the interest-rate markets are saying [that] you need to cut rates by enough, as if we’re going into a recession, but the equity markets on the other hand still say we’re going to re-accelerate the economy and earnings growth is going to come back,” he said. “Only one of them will be right.”

Speaking on the same panel, Hillhouse founder Zhang Lei suggested using technology to enhance the skills and processes of businesses, while Granite Asia senior managing partner Jenny Lee said the days of 1,000 times in returns in Asia’s venture capital space were over.

Source: Theedgemarkets

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Warren Takunda

Economic

Stocks

Asian stocks surged on Friday with Japan’s Nikkei leading regional gains after Wall Street romped to records following the Federal Reserve’s big cut to interest rates.

U.S. futures and oil prices were lower.

The Bank of Japan ended a two-day monetary policy meeting and announced it would keep its benchmark rate unchanged at 0.25%.

In Tokyo, the Nikkei 225 index soared 2.1% to 37,935.58 after the nation’s key inflation data in August accelerated for a fourth consecutive month. The core consumer price index rose 2.8% year-on-year in August, exceeding the central bank’s 2% target and leaving room for further rate hikes.

Markets are closely watching for hints on the pace of future rate hikes from BOJ Gov. Kazuo Ueda.

“For the BOJ, given current economic conditions and recent central bank rhetoric, further policy adjustments are not expected until later this year or early 2025,” Anderson Alves of ActivTrades said in a commentary.

The U.S. dollar fell to 142.32 Japanese yen from 142.62 yen. The euro rose to $1.1166 from $1.1161.

China refrained from further monetary stimulus as the central bank left key lending rates unchanged on Friday. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, stays at 3.45%, and the five-year rate, a reference for property mortgages, was held at 3.85%.

The Hang Seng in Hong Kong added 1.1% to 18,206.68 while the Shanghai Composite index fell 0.2% at 2,729.69.

Elsewhere, Australia’s S&P/ASX 200 rose 0.2% to 8,209.70. South Korea’s Kospi was up 0.8% to 2,600.29.

On Thursday, the S&P 500 jumped 1.7% to 5,713.64 for one of its best days of the year and topped its last all-time high set in July. The Dow Jones Industrial Average leaped 1.3% to 42,025.19, and the Nasdaq composite led the market with a 2.5% spurt to 18,013.98.

Wall Street’s gains followed rallies for markets across Europe and Asia after the Federal Reserve delivered its first cut to interest rates in more than four years on Wednesday.

That closed the door on a run where the Fed kept its main interest rate at a two-decade high in hopes of slowing the U.S. economy enough to stamp out high inflation. Now that inflation has fallen from its peak two summers ago, Chair Jerome Powell said the Fed can focus more on keeping the job market solid and the economy out of a recession.

Wall Street’s initial reaction to Wednesday’s cut was a yawn. Markets had already run up for months on expectations for lower rates. Stocks edged lower after swinging a few times.

“Yet we come in today and have a reversal of the reversal,” said Jonathan Krinsky, chief market technician at BTIG. He said he did not anticipate such a big jump for stocks on Thursday.

The Fed is still under pressure because the job market and hiring have begun to slow under the weight of higher interest rates. Some critics say the central bank waited too long to cut rates and may have damaged the economy.

Some investment banks raised their forecasts for how much the Federal Reserve will ultimately cut interest rates, anticipating even deeper reductions than Fed officials.

The U.S. presidential election adds to uncertainties. One fear is that both the Democrats and Republicans could push for policies that add to the U.S. government’s debt, which could keep upward pressure on interest rates regardless of the Fed’s moves.

In the bond market, the yield on the 10-year Treasury held steady at 3.71%, where it was late Wednesday. The two-year Treasury yield, which more closely tracks expectations for Fed action, fell to 3.58% from 3.63%.

In other dealings, U.S. benchmark crude oil lost 20 cents to $69.68 per barrel. Brent crude, the international standard, declined 22 cents to $73.43 per barrel.

Source: AP

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Stocks

Economic

Nikkei 225 ends week on a high

The Nikkei 225 has risen in line with US stock indices after the Federal Reserve (Fed) cut its interest rates for the first time in four years and by a bumper 50 basis points (bps) as the Bank of Japan left rates unchanged as expected.

The 200-day simple moving average (SMA) at 38,527 represents the next upside target, followed by the late July and early September highs at 39,179-to-39,281.

Minor support can be seen along the 55-day SMA at 37,195 and the 12 September high at 37,062.

DAX 40 hits record high

The German DAX 40 index made a new record high at 19,048 on Thursday, a rise above which could lead to the major psychological 20,000 mark being reached.

Potential slips should find initial support around the 18,782 July peak.

The medium-term uptrend is deemed to stay intact while last week’s low at 18,188 underpins.

Another Strong Week for the Nikkei 225, DAX 40 And Dow_2

Dow Jones Industrial Average hits yet another record high

The Dow Jones has seen seven straight days of gains and has been hitting new record highs over the past three days, aided by the Fed’s large 50 bp rate cut after holding rates at a 23-year high of 5.25% to 5.50%.

The 42,500 region represents the next upside target zone with the previous record August high made at 41,587 now acting as potential support. This is due to inverse polarity. Another Strong Week for the Nikkei 225, DAX 40 And Dow_3

Another Strong Week for the Nikkei 225, DAX 40 And Dow_3

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Owen Li

Economic

US President Joe Biden said on Thursday he expects the Federal Reserve (Fed) to continue cutting interest rates and vowed that his administration would keep working to lower costs for Americans.

Biden used an Economic Club of Washington event with 500 guests to promote his administration's policies to bring down inflation after the Covid-19 pandemic and Russia's invasion of Ukraine, issues that have driven voters' anxiety.

"Interest rates are going to be coming down and they're expected to go down further. That's a good place for us to be," the president said.

Inflation is much closer to the Fed's 2% target, Biden said, calling the US central bank's half-percentage-point cut in interest rates on Wednesday "good news for consumers."

"I'm not here to take a victory lap ... We do have more work to do," Biden added.

Many economists had predicted a recession would be needed to lower high inflation, but have so far been proven wrong as Biden's policies aimed at expanding domestic manufacturing, investing in clean energy and other infrastructure, and capping drug costs for seniors helped create 16 million jobs and raised wages, Jeff Zients, the president's chief of staff, told reporters in a call.

Polls show Americans remain deeply worried about the economy and inflation, with Vice President Kamala Harris, who became the Democratic presidential nominee when Biden bowed out of the race in July, and Republican former president Donald Trump essentially deadlocked less than seven weeks before the Nov 5 US election.

A Reuters/Ipsos poll released this week showed Trump had an advantage on the issue of inflation, which surged under Biden to a 40-year high in 2022. Some 43% of voters in the poll said Trump would be more likely to "lower prices for everyday things like groceries and gas", compared with 36% who picked Harris.

Fed Chair Jerome Powell, speaking on Wednesday after the US central bank announced its oversized rate cut, said the economy remained strong but policymakers wanted to stay ahead of and stave off any weakening in the job market. The unemployment rate, now at 4.2%, is more than half a percentage point higher than it was when the Fed began an aggressive rate-hike campaign in March of 2022.

National Economic Council Director Lael Brainard said on the same call with reporters that the Fed's rate cut sent a "clear signal that inflation has come back down," noting that it was now at the same level seen in the month before the Covid-19 pandemic began.

Mortgage rate reductions that have already happened would save the average home buyer US$5,000 (RM20,982) a year, with savings to increase as the rates declined further, she said.

But Brainard added that further work was needed to drive down housing costs and support childcare needs.

The White House is monitoring escalating tensions in the Middle East, but sees no significant risks to the broader economic outlook, said an administration official, who did not wish to be named.

Source: Theedgemarkets

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Warren Takunda

Cryptocurrency

Bitcoin’s price is trading near its highest levels in a month following back-to-back dovish updates from the United States and Japan’s central banks.

Bank of Japan keeps interest rate steady

On Sept. 20, the BTC price rose by circa 2.5% to over $64,120, coinciding with the Bank of Japan’s decision to keep its interest rates steady after last month’s hike. Why Is Bitcoin Price Up Today?_1

BTC/USD daily price chart. Source: TradingView

The judgment contrasts with the US Federal Reserve’s 50 basis point rate cut a day ago, thus reducing the risks associated with the unwinding of “yen carry trades” that crashed the Bitcoin price by almost 25% in August.

In other words, investors see no immediate risk of rising borrowing costs in Japan, meaning they can borrow the Japanese yen cheaply and hold their positions in higher-yielding assets like Bitcoin.

Moreover, the Federal Reserve’s 50 bps rate cut encourages the continuation of speculative investments as interest rates on safer assets remain unattractive.

Overall, this helps Bitcoin’s rise as investors feel more confident in maintaining or increasing their exposure to high-yield assets.

Bitcoin’s OI, funding rates hit monthly highs

Bitcoin’s price rise today is further accompanied by a strong rise in the open interest (OI) and funding rates in its futures market.

As of Sept. 20, the total number of unsettled Bitcoin futures contracts was around $34.39 billion, its highest since Aug. 26. Meanwhile, its funding rates were around 0.189% per week despite having slipped into negative territory earlier in the month. Why Is Bitcoin Price Up Today?_2

Bitcoin Futures open interest, funding rate performance chart. Source: Coinglass

When open interest rises, more capital flows into the market, which often corresponds with expectations of significant price movements. This implies that traders are actively positioning themselves in the market, potentially anticipating further price increases.

The fact that funding rates have shifted from negative territory earlier in the month to positive territory now suggests a shift in sentiment toward a more bullish outlook.

That means more traders expect Bitcoin’s price to continue rising and will pay the funding cost to hold their long positions.

Bitcoin nears bull flag breakout

Bitcoin’s gains today are part of a rebound that started last week when it tested the lower trendline of its prevailing bull flag trend. Why Is Bitcoin Price Up Today?_3

BTC/USD three-day price chart. Source: TradingView

The price is now heading toward the flag’s upper trendline at around $65,500, eyeing a breakout toward $78,400. As a rule, the upside target for a bull flag is measured after adding the breakout point to the height of the previous uptrend.