The US economy is showing more signs of softening. The latest signal was the housing market which posted its third monthly existing home sales decline. On a monthly basis home sales in June declined 0.6% after declining 0.4% in May. Home sales fell to $5.38 million from $5.43 million. At the same time, pending home sales declined 2.2% vs. 2.1% the month before. Construction spending rose 0.4% in May vs. 0.9%. Housing starts came in at 1,173,000 after posting a level of 1,337,000 the month before. Building permits were logged at 1,273,000 vs.1,301,000.
There is every indication that the housing market will continue to contract in the months ahead. The Fed’s statements of further interest rate hikes and the continued firming of oil prices all point to a weaker real estate market. Quantitative easing is no longer part of the Fed’s tool kit. Confirmation or a refutation of this trend will come with the next employment numbers which are due out by month’s end.